Turning bolts, Germans were told - often by other Germans - had no future in Germany. The persistence of heavy manufacturing symbolized the country's inability or unwillingness to transform itself into a modern, services-oriented economy like the United States or Britain, two oft-used yardsticks.
Today, the manufacturing sector in Germany is growing as a proportion of the country's total economic output, and Germany looks set to outpace far larger economies like China and the United States as the world's largest merchandise exporter for the fourth year running.
"The critics have one point in that the Germans are dependent on the 'old economy,"' said Andreas Rees, chief Germany economist in Munich for UniCredit. "But paradoxically that is an incredible strength of Germany right now."
While there were signs this summer that China was poised to move into a "tie" with Germany [Aug 26, 2009: China Poised to Tie Germany for World's Lead in Merchandise Exports], China appears quite impatient and according to the Wall Street Journal will pass Germany this year.
- China took over the mantle of the world's top merchandise exporter from Germany in 2009, according to the latest figures, aided by a global economic crisis that has taken a greater toll on other trading powers. China exported $957 billion of goods in the first 10 months of 2009, compared with $917 billion for Germany. No changes in November or December are expected to overturn the Chinese lead, trade experts say. China is likely to publish trade figures for the full year next week.
- China's claiming of the title of world's largest exporter was widely expected, with annual growth in its exports regularly exceeding 20% during the past decade. China in 2007 overtook Germany as the world's third-largest national economy, and is on track to soon surpass Japan to become the second-largest economy after the U.S. [Oct 5, 2009: NYT: China Set to Pass Japan as World's 2nd Largest Economy]
- China's ascendancy has been accelerated by the international financial crisis, from which it has suffered less than other major economies. With trade in tatters around the world, Chinese exports fell 20.4% during the first 10 months of 2009, compared with 27.4% for Germany and 21.4% for the U.S. The trade figures don't include transactions in services, which are significant in developed economies but a weak point for China.
- "Most of the products China produces for the global market are life necessities," says Huang Huiguo, chief executive of Kingsons International, a Guangzhou-based exporter of leather bags.
- China's currency, the yuan, is tied to the sinking dollar, helping to keep the country's exports competitive on price. (you're welcome) Those factors helped Chinese goods gain market share in the U.S., Europe and Japan last year.
- Many of China's exporters earn relatively slim profits churning out goods designed and marketed by other companies.
- For Germany, the rise of China has brought opportunities as well as challenges. The country is "our biggest competitor but also our most dynamic market," says Jens Nagel, a trade expert with the German Exporters Association.
- Many German companies say their exports to China and other emerging economies are buoyant again, but that sales to the U.S. and other European countries -- which are Germany's biggest market -- are recovering more slowly, if at all.
- Germany's primary economic problem isn't that they country exports too little, but that its own consumers don't spend enough, which holds back its domestic service sectors, many economists say. (perhaps we can trade some Americans for Germans and help balance out both economies; we'll export some of our spenders - especially those who enjoy buying things they have no chance of ever paying for - and import some nice German savers who we can then loot to help pay the bills for the Americans who spend with no chance of ever paying it back - problem solved.)