[其他] Leader_The German export machine is in need of an upgrade [推广有奖]

Germany is enjoying possibly its longest economic upswing since the second world war. Unemployment stands at 3.5 per cent. Wage growth is accelerating. The government coffers are overflowing and public debt is plummeting. Its brands are synonymous with quality. Economic strength has given it pre-eminence in Europe. Germans have never had it so good.

Suddenly, however, Germany’s export-driven economic model is beginning to look vulnerable. Protectionism is on the rise and value chains in manufacturing are being unpicked. As China has ramped up its efforts to acquire foreign technology and substitute high-tech imports for domestically manufactured ones, Germany can no longer be sure its bet on engagement will pay off. Britain, its third largest export market, is leaving the EU and could fall out of the single market with no preferential trading deal at all. Italy, its sixth largest market, could be pitched into a financial crisis by its Eurosceptic government.

US President Donald Trump has trained his fire mostly on China. But Europe could move back into his crosshairs at any moment. Transatlantic efforts to avert a trade fight and indeed liberalise trade in industrial goods have made little progress so far. The hawks in the Trump administration are itching to impose import tariffs on European, meaning largely German, cars.

Germany finds itself singularly at risk because it is more dependent on open markets than other big economies. It has also been a huge beneficiary. The German Council of Economic Experts, an official advisory panel, reckons that half of the growth in real income per capita in Germany in the last 20 years is attributable to trade.

As the council pointed out in its annual report published last week, now is the moment, with growth solid and before demographic decline really kicks in, for Berlin to prepare for major structural economic changes ahead.

Germany needs to focus on policies to improve productivity growth, encourage more people into the labour market and stimulate investment. The country has under-invested in roads, airports and railways. Mobile phone coverage can be frustratingly patchy. Internet speeds are relatively low. Education is good but not world-class. Many of these are regional or local responsibilities. But higher spending allocations would help. So would regulatory changes to push companies to invest in digital infrastructure.

After a slow start, Germany’s car companies are racing to catch up in the switch to electric. The country has some real technology champions, such as software group SAP, and a thriving tech start-up scene, even if access to finance in Germany can still be a challenge. But digitalising the corporate world more broadly, especially smaller companies, should be a top policy. Mittelstand business became the backbone of Germany by perfecting niche products often first invented by others. That is harder to replicate in the digital economy where scale is vital.

Boosting private and public investment, opening up services and raising consumption would be good for Germany. They would also help the rest of the eurozone, which has been squeezed mercilessly by an unbalanced German economy.

A changing of the political guard in Berlin, as Angela Merkel prepares to bow out as chancellor, is also a propitious time for the governing Christian Democrats to embrace ambitious reforms. Fears that the good times will soon come to an end has often inspired Germans to tighten their belts and batten down the hatches. But this is a time for boldness not conservatism.