Yearender: German export to remain world's biggest in 2008, difficult year ahead

By Wu Liming

BERLIN, Dec. 19 (Chinese media) -- Germany, the world's biggest exporter since

2003, is expected to retain the title in 2008, but its exports will face severe

challenges in 2009 because of the worldwide economic downturn and recession.

2008 EXPORT CHAMPION ALMOST CERTAIN

Germany has worn the crown as the "champion of exports" since 2003. Since

last year, however, the robust growth of Chinese exports has put Germany under

pressure of losing the championship.

Last week, German Economy Minister Michael Glos said that the country has a

good chance of remaining the world's biggest exporter in 2008.

In an interview with German daily the Frankfurter Allgemeine Zeitung, Glos

said the latest figures from the World Trade Organization (WTO) show Germany is

well positioned to surpass China again with its exports this year.

"The preliminary data prove that Germany can remain export world champion

again in 2008," he claimed.

The WTO figures indicated that Germany had exported 1.157 trillion U.S.

dollars worth of goods by the end of September. German Federal Statistical

Office said on Dec. 9 that German exports hit 89.7 billion euros (around 115.3

billion dollars) in October. In other words, German exports in the first 10

months of this year stood at around 1.272 trillion dollars.

Figures from China General Administration of Customs (CGAC) show that

China's exported goods worth 1.202 trillion dollars in the first 10 months of

this year, lagging behind Germany by just around 70 billion dollars.

As the largest economy in the European Union (EU) and the third-largest in

the world, Germany claims its leading position in exports as a result of its

advantages in industrial manufacturing and technology.

Germany has long been the world leader in mechanical engineering, holding

about 20 percent of the global market.

Core German exports include such engineering products as vehicles,

machinery, chemical equipments, electronics, shipbuilding and optics. German

brands, including DalmerChrysler, BMW, SAP, Siemens, Volkswagen, Adidas-Salomon

and Porsche, are among the highest-valued in the world.

CHALLENGES FROM CHINA

Over the past two years, Germany has been faced with challenges from China,

and the neck-to-neck race between the world's two leading exporting countries

has been closely followed by economic observers.

Over the past decade, the Chinese economy saw sustained robust expansion,

in which foreign trade played a vital role.

Figures from the CGAC show that from 2002 to 2007, the annual growth rate

of China's foreign trade stood at as high as 28.5 percent. In 2007, China's

trade volume hit 2.17 trillion dollars, the third biggest in the world, among

which the export was 1.22 trillion dollars, up 25.7 percent over the previous

year.

German Federal Statistical Office said German exports expanded to 969.1

billion euros (around 1.354 trillion dollars) in 2007, up8.5 percent over the

previous year.

According to latest figures from the WTO, German exports in the first nine

months of this year were up 20.3 percent compared with the same period in 2007

while Chinese exports grew by 22.3 percent.

As the margin of exports between the two export powerhouses is becoming

increasingly smaller, just as the Frankfurter Allgemeine Zeitung put it out: "It

is only a matter of time before the faster-growing Chinese economy becomes the

world's biggest exporter of goods."

DIFFICULTIES AHEAD

Looking ahead, the neck-and-neck race between Germany and China for the

title of the "champion of exports" will continue in a time when the world is

faced with the hardship of financial crisis and economic recession.

As the world's leading export nation, latest German trade figures have

underscored how vulnerable Germany is to slumping domestic and global growth.

German Federal Statistical Office said on Dec. 9 that the nation's exports

dropped by 0.5 percent month on month in October. In September, German exports

saw a decrease of 0.5 percent year-on-year.

German industrial production dropped 2.1 percent in October compared with

September, German Economics Ministry said last week.

Industrial giants like DalmerChrysler and BMW had already announced

shutdown of factories for as long as five weeks during the Christmas season,

arousing more skepticism over economic prospects among the general public.

German Federal Statistical Office said German economy shrank by0.4 percent

and 0.5 percent quarter-on-quarter respectively in the second and third quarter

this year.

Last week, the Bundesbank, the nation's central bank, said in its latest

economic projections that the German economy will contract by 0.8 percent next

year. Earlier last month, German Finance Minister Peer Steinbrueck warned that

the German economy could shrink by up to one percent in 2009. That would be the

biggest economic contraction since 1945.

As the European Union (EU) is the top exporting destination for Germany, a

slumping EU economy would cast more shadow on German exports.

Official data show that German exports to the EU countries decreased by 0.6

percent in October this year, among other negative consequences of economic

downturn across Europe.

Last month, the European Commission announced that the euro zone had

slipped into recession and predicted close to zero economic growth for the

15-nation area next year.

For the 27-nation EU as a whole, the European Commission predicted that the

economic growth will drop sharply in 2009 to 0.2 percent.

The United States, another major exporting destination for Germany, is also

in economic recession.

China has also encountered with troubles in foreign trade amid the global

economic slowdown. The CGAC said on Dec. 10 that China's exports was down 2.2

percent in November, the first monthly decline since June 2001.

However, observers say China is in a better place as its economic growth is

expected to see no sharp slowdown next year.

The World Bank predicted that China will still maintain a growth of 7.5

percent in 2009, while the China Academy of Social Sciences forecast a growth of

9.3 percent.

It's still hard to forecast which country would be crowned the title of

"champion of exports" in 2009 but there will be no doubt that Germany will have

to fight an uphill battle to defend its title.