Germany closing factories at home, opening them in China

Germany’s domestic energy policies and economic environment are driving its biggest industrial players away from home and toward more favorable conditions in China. Escalating energy costs, massive subsidies for renewable energy and stringent regulations have created an environment in Germany that is increasingly hostile to industrial growth.

As a result, many of Germany’s most established companies are downsizing at home, shedding thousands of jobs, while investing heavily in China. This shift underlines the profound impact of current policies on Germany’s industrial landscape, with long-term implications for the local economy and employment.

Asia Times examines here the key factors and the companies that are reshaping their operations abroad.

High energy costs in Germany: The result of ideological policies

Germany’s energy policies have driven industrial electricity prices to levels that are among the highest in the world, second only to the UK. By 2023, the average price for industrial users will have reached almost US$250 per MWh; even this cost level is unsustainable without substantial government subsidies, which have now reached unprecedented levels.

Germany’s reliance on renewable energy sources such as wind and solar, combined with the phasing out of nuclear power, has increased the country’s reliance on imports and caused severe price volatility, ultimately putting pressure on both industry and taxpayers. These high prices have forced many companies to consider scaling back operations in Germany in favor of expanding abroad, particularly in China.

Industrial energy consumption down by more than 16% in 2 years

In 2023, energy consumption in Germany’s industrial sector fell to 3,282 petajoules, a decrease of