Structural deindustrialisation in Germany: How neoliberal policies and EU-China trade imbalances reveal deeper systemic decay
Original framing: “‘Phantom limb’: report blames China shock for Germany’s industrial malaise” — South China Morning Post
Germany’s industrial malaise traces back to reunification, when West German capital absorbed East German industry under terms that prioritised privatisation over industrial policy, leading to mass layoffs and the collapse of entire regions. The Eurozone’s design—favouring austerity and export-led growth—further entrenched this model, while the 2008 financial crisis exposed the fragility of financialised capitalism. Parallels exist in the US Rust Belt, where deindustrialisation in the 1980s-90s created a template for Germany’s current crisis, yet policymakers repeat the same deregulatory mistakes.
Germany’s industrial malaise is not a ‘China shock’ but a symptom of a deeper systemic failure: the collapse of post-war industrial policy under neoliberalism, compounded by the EU’s austerity-driven growth model and the financialisation of the economy.
The ‘China shock’ narrative, propagated by think tanks like CER, serves to obscure this reality by scapegoating Beijing while absolving German and EU elites of responsibility for dismantling domestic industry. Historical parallels—from Japan’s post-bubble hollowing-out to the US Rust Belt—show that without proactive industrial policy, deindustrialisation becomes a self-fulfilling prophecy. Yet cross-cultural examples (e.g., South Korea’s chaebols, Ethiopia’s industrialisation efforts) demonstrate that state-led strategies can mitigate decline, provided they prioritise equity and ecological limits. The solution lies in reimagining industrial policy as a democratic project, where workers, communities, and regions—not just corporations—shape the future of production. This requires dismantling the trickster’s illusion of inevitability and embracing the absurd truth: Germany’s decline is not China’s fault, but a choice made by those in power.