IfW economists: decoupling diminishes prosperity

Around the globe, China skepticism is on the rise. Not least, the supply bottlenecks at the beginning of the pandemic have also fueled discussions in Germany about greater economic independence and decoupling from the People’s Republic. The Kiel Institute for the World Economy (IfW) has now used simulations to calculate how a decoupling from the People’s Republic would impact the EU economy. The result: if the EU unilaterally doubled trade barriers against China, costs of around €130 billion (0.8 percent of GDP) could arise. And with comparable countermeasures by China, the costs would grow to €170 billion (1 percent of GDP). The study thus aims to contribute to the discussion on „decoupling“ from China.