German Exports to Asia Surge, Calming Nerves Over Protectionist Backlash

By Nina Adam Features Dow Jones Newswires

German exports to Asia are rising strongly this year in a trend that could mitigate the risks to Europe's largest economy should U.S. President Donald Trump make good on his protectionist promises.

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Figures released on Wednesday showed Germany's exports to China rising 12% in the first four months of the year compared with the same period in 2016. Exports to India rose by a similar rate, while shipments to Indonesia and Vietnam jumped more than 20% each from January to April 2016, according to the Federal Statistical Office.

"We are benefiting from our excellent positioning in East Asia and strong demand for consumer electronics," said Robert Saller, a managing director at DELO, a family-run producer of special adhesives for electronic devices. China last year became DELO's biggest market, relegating Germany to second place.

German exports to the U.S. and to European Union members are also growing -- albeit at slower rates -- but the outlook is vulnerable to the threat of rising U.S. protectionism and the U.K.'s exit from the European Union. Economists warn that a U.S.-led shift away from free trade will hurt economic growth and prosperity globally.

Mr. Trump has repeatedly criticized Germany for its large trade surplus with the U.S. and threatened to impose tariffs on German car imports. But action by the U.S. administration has proved modest while German businesses have remained committed to the large U.S. market.

German exports to the U.S. rose 3.9% in the first four months of 2017 from the same period last year. Exports to the U.K. fell by around 4%.

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Given increased tensions between Europe and the U.S. over issues such as climate and free trade, European leaders have redoubled efforts to cultivate China. German Chancellor Angela Merkel and Chinese Premier Li Keqiang met in Berlin earlier this month, and Mr. Li stressed that both parties were "in favor of fostering free trade and the simplification of investment."

German businesses' rising exports to Asia draw on a long record in the region. Economists say that China's One Belt, One Road initiative -- -a series of vast infrastructure projects to connect mainland China with the rest of the continent- -- will open up more opportunities for trade.

Last year, China became Germany's largest trading partner, with combined imports and exports of almost EUR200 billion ($223 billion).

Five years from now, the Europe Union's export revenues with Asia will be almost twice its export revenues with the U.S., estimated Charles-Edouard Bouée, chief executive of Roland Berger. "We are very positive on the outlook for Asia," Mr. Bouée said.

The regional shift is already visible in Germany's trade statistics today. New data by the Federal Statistical Office show that German companies exported goods worth EUR66.9 billion to Asia in the first four months of this year, compared with shipments of EUR37.4 billion to the U.S.

German companies' reputation for quality engineering and a mix of specialized goods, including capital goods used to build factories and infrastructure, have long been a vital ingredient in the country's export prowess.

Germany is the third largest exporter in the world after China and the U.S. and exposed to a variety of regions, which has helped the country's exporters weather economic shocks in specific markets in the past.

Write to Nina Adam at nina.adam@wsj.com

(END) Dow Jones Newswires

June 21, 2017 09:41 ET (13:41 GMT)