EU warned that a trade spat with China might cost Germany six times as much as Brexit. 

In a trade war, the EU’s decoupling from China would force Germany’s economy to suffer six times more than it has as a result of Brexit. 

The largest economy in the bloc would suffer millions of dollars in losses if China started a trade war with the West. 

According to a survey by the Ifo Institute, of all the EU member states, Germany stands to lose the most, with the manufacturing of machinery, the production of transportation equipment, and the automotive industry being the most vulnerable sectors. 

Lisandra Flach, co-author of the paper, said: “Deglobalisation makes us poorer.

“Rather than turning away from important trading partners without good reason, companies should additionally source inputs from other countries in order to reduce one-sided and critical dependencies on certain markets and authoritarian regimes.”

Major Brand Discounts
video
play-rounded-fill

According to the analysis, even a trade agreement with the US would not be able to rescue the EU from the financial consequences of losing China as a trading partner since it would cost Germany six times as much as Brexit. 

The study is being released as the European Union works to strengthen its presence in the Pacific via new security obligations and commercial links as geostrategic rivalry in the area heats up, the bloc’s ambassador to Pacific Island countries said on Tuesday. 

The EU has traditionally been seen as a development partner in the Pacific, but Ambassador Sujiro Seam told Reuters during an interview while on a visit to New Zealand that the EU also wants to be considered as an economic and strategic partner. 

The EU’s plan comes at a time when big countries are competing for power in the area. The US and Australia are getting more involved in the Pacific after China made a security deal with the Solomon Islands this year.

“The geostrategic importance of the Pacific is recognised by everyone, including the European Union,” Seam said.

Due mostly to France’s connections to French Polynesia, the EU has long had a presence in the Pacific. 

The group launched a 300 billion euro ($305 billion) global infrastructure fund in 2021 and outlined a formal Indo-Pacific policy, which Seam said was bolstering connections. 

He noted that the EU is finalising plans to invest 5 million euros on a feasibility study for a port on Kiritimati Island in Kiribati. He also said that the EU has a number of development projects going on in the area and is looking into more.

“We’ve always said our position in the region is not against anybody. We’re not here to contain China,” Seam said.

He added: “However, when countries make decisions on who to partner with it is important they assess the consequences such as whether they are being offered development aid or loans.

“Most of the assistance from China actually … it’s loans.

“So that increases the debt vulnerability of these countries.”

Economic prospects are a component of the goal to increase the EU’s presence in the Pacific, according to Seam, and the organisation has partnered with a number of Pacific countries and is now negotiating a similar arrangement with Tonga to provide them with greater access to European markets. 

According to him, the EU also intended to expand its maritime surveillance presence in the Indo-Pacific. 

Major Brand Discounts

The French military, which often possesses assets in the area, has previously been used to help the EU.

Have your say by leaving a comment.