Title: The Looming Economic Crisis in Germany: A Tale of Two Shocks The economic crisis that has been plaguing Germany’s manufacturing sector for more than five years shows no signs of abating. With exports nose-diving, job cuts and furloughs mounting, and production down 4.5 percent in the past six months alone, it is clear that something big needs to change. The VDMA, an industry association representing thousands of German companies that manufacture industrial machines and equipment, has sounded the alarm bells on this issue. The causes of Germany’s economic crisis are multifaceted. Higher energy prices following Russia’s invasion of Ukraine have certainly played a role in exacerbating the situation. Additionally, U.S. tariffs have also taken their toll on German businesses. However, there is another shock that threatens to hit Europe’s largest economy even harder: China Shock 2.0. The first China Shock occurred during the early 2000s when China joined the World Trade Organization (WTO) and began flooding global markets with cheap goods. This led to a decline in manufacturing jobs across many developed countries, including Germany. While Germany managed to bounce back from this initial shock relatively well due to its strong export market and innovative industries, it now faces an even more significant challenge as China continues to grow economically and technologically. The potential implications of the next China Shock are dire for Germany’s economy. As China becomes increasingly self-reliant in terms of technology and manufacturing capabilities, there is a risk that German companies will lose out on lucrative contracts within China itself. Furthermore, as Chinese products become more advanced and competitive with those produced by European manufacturers, it could lead to further declines in Germany’s export market. From an historical perspective, this situation bears striking similarities to the first China Shock. Just like before, German companies must adapt quickly if they hope to survive in a rapidly changing global landscape. This may involve investing heavily in research and development or exploring new markets outside of Europe and Asia. In conclusion, the looming economic crisis in Germany is not just another blip on the radar; it represents a fundamental shift in the world economy that could have far-reaching consequences for European businesses as well as global trade relations. As such, policymakers must act swiftly to address these challenges head-on and ensure that Germany remains competitive on the international stage.
Source: [Original Article](https://www.npr.org/sections/planet-money/2025/09/30/g-s1-90937/germany-thrived-in-the-first-china-shock-but-the-next-one-could-prove-catastrophic)
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