The government of Germany is prostituting itself in its pursuit of expanded trade opportunities with China . It will result in the hollowing out of two of Germany’s most important manufacturing industries, vehicles and high value added machinery.

China faces long-term economic challenges , including an aging workforce, a declining population, the migration of low-skill manufacturing to emerging economies, excessive debt, high youth unemployment, inefficient state-owned enterprises, capital flight, and the unwillingness of Chinese households to reduce savings and increase consumption. In order to prevent a severe economic downturn, China uses trade policy to maintain a modicum of economic growth and to promote employment. China will promote growth through the global export market. China will subsidize the production of exports and it will depreciate its currency to make its products more attractive in international markets.

And as China again pivots to the global export market in pursuit of jobs and growth, Germany opens its economic door to Chinese Premier Li Qiang. German Chancellor Olaf Scholz , by welcoming Li Qiang and promising increased capital investment and trade, is inviting the red wolf, China, to devour the heart of the German economy: vehicles and high value added manufactured goods.

In February 2020, FBI Director Christopher Wray warned American business leaders that China would relentlessly steal "sensitive technology and proprietary information from United States companies, academic institutions, and other organizations" in order to climb up the economic ladder of the production of global goods and services. It was too late. Large parts of the U.S. goods market have been destroyed by cheap Chinese imports. China will use the same tactics to destroy German manufacturing. Today, China is importing German manufactured goods. Tomorrow, China will be the global low-cost producer of such goods.

China will steal German manufacturing technology and processes. China will reverse engineer production techniques, and through lower labor costs, lower costs of capital, and direct subsidies, China will supplant Germany as the preeminent global supplier of high value added manufactured goods. What is so shocking about Germany’s policy of opening its economic door to the red wolf is that French President Emmanuel Macron is warning Germany about the economic threat posed by China in this regard. The international trade data on electric vehicles demonstrates that China is devouring the heart of the German economy, the German auto industry. The growth rate of Chinese exports of EVs into the European Union is similar to that of a hockey stick, straight up at almost a 180-degree angle.

Germany’s pursuit of a green economy plays into the hands of China. China has a near monopoly market share position in many of the raw materials necessary to manufacture EV batteries, the most expensive component of an EV. So, with a significant comparative advantage on raw materials and lower labor costs as well as state subsidies, China is flooding the EU vehicle market with low-cost products. Large geographies of Germany will soon resemble the rusting factories of what was the heartland of the U.S. car industry: Michigan, Indiana, and Ohio especially.

But the U.S. should not shed tears for Germany. In the global battle against the despotism of China and Russia, Germany is the preeminent quisling.

James Rogan is a former U.S. foreign service officer who later worked in finance and law for 30 years. He writes a daily note on finance and the economy, politics, sociology, and criminal justice.