Nagel warns: Europe must protect its automotive industry from Chinese competition
In remarks reflecting growing European concern over shifts in the global trade balance, Joachim Nagel, president of the German central bank (Bundesbank), issued a direct and explicit call to European leaders to take a firmer stance in protecting the continent's strategic industries. Nagel demanded that clear "red lines" be drawn that China cannot cross, warning against naiveté in dealing with industrial policies emanating from the East.
Warning against political naiveté
In an interview with the German newspaper Tagesspiegel, Nagel emphasized that trade relations with Beijing remain vital, stating, "China remains an attractive market for European exporters and an important source of consumer goods." However, the senior finance official cautioned that this trade dependence should not obscure the risks, adding, "Governments must not be naive when it comes to key and sensitive sectors, especially the automotive industry, which is the backbone of the economy in many European countries.".
Context of the conflict: The electric car battle
Nagel's remarks come at a particularly critical time for the European economy, as the traditional automotive industry in Germany and Europe faces unprecedented challenges. Experts point out that German concerns stem from the massive influx of low-cost Chinese electric vehicles into European markets, which benefit from generous Chinese government subsidies, creating competition that Europeans perceive as "unfair." This context explains Nagel's call to protect industries before they fall "victim to aggressive industrial policy," a clear reference to strategies of dumping and control over supply chains.
Repercussions of global protectionist policies
Nagel's remarks weren't limited to China; he also addressed the complex global trade landscape, specifically referencing the trade policies of former US President Donald Trump. Nagel explained that while Trump's high tariff policies were intended to protect the US domestic market, they ultimately harmed everyone, emphasizing that "the main losers are American consumers" who bear the brunt of higher costs for goods.
The resilience of the German economy
In closing, the head of the German central bank sought to reassure markets about the state of the domestic economy. Despite global challenges, Nagel emphasized that "it is currently impossible to accurately determine the impact of tariffs on the German economy," refuting the bleak picture sometimes portrayed and stressing that the German economy "is not suffering from the decline that is often described," but rather possesses the resilience to withstand current changes if the necessary protective measures are taken at the European level.
