A high song in Germany and the EU - why they need themselves to be able to survive against the USA and China

Published on: July 8, 2025 / Updated on: July 8, 2025 – Author: Konrad Wolfenstein

A paean to Germany and the EU – Why they need each other to stand up to the USA and China – Image: Xpert.Digital

Germany without the EU: Economic giant or political dwarf in the global power struggle

The invisible lever: How the EU is helping Germany become a world power

Germany's significance within the European Union is widely discussed and assessed in various ways. However, especially in times of global upheaval and geopolitical tensions, it becomes clear how much the Federal Republic benefits from close cooperation with its European partners – and how much the EU, in turn, depends on German engagement. The following thought experiment invites us to examine the often hidden, but all the more effective, interactions between Germany and the EU and to highlight their strategic importance in a global context.

In a hypothetical world of individual components, Germany would be a giant. In the real world of economic blocs, however, it is only through the EU that it is able to operate on an equal footing with the true giants – the USA and China.

Let us substantiate this “song of praise” for Germany and the EU with a more detailed analysis.

An insightful thought experiment: The illusion of sole strength

If one breaks down the economic output of the USA to its states and that of China to its provinces, Germany, with its gross domestic product (GDP) of around 4.5 trillion US dollars (forecasts for 2024/2025), would actually be at the top of the world.

Germany: ~$4.5 trillion USD
California (USA): ~$4.0 trillion USD
Texas (USA): ~$2.6 trillion USD
Guangdong (China): ~$2.0 trillion USD

This thought experiment reveals a crucial truth: The enormous economic power of the US and China stems from their unity and size. They operate as closed, gigantic domestic markets with a unified trade, monetary, and often also industrial policy. This is precisely where the fundamental importance of the EU for Germany – and vice versa – lies.

: Understanding the USA better: A mosaic comparing US states and EU countries – analysis of economic structures – Image: Xpert.Digital

: For Chinese readers: Understanding the EU better – From Guangdong to Germany – How similar do these economic giants really think? – Image: Xpert.Digital

Suitable for:

Why Germany needs the EU: From national champion to European giant

On its own, Germany would be a wealthy but ultimately vulnerable medium-sized country in the global power struggle. Through the EU, it becomes a crucial part of an economic area that can compete with the USA and China.

1. The Single Market: The indispensable lifeline

The EU single market, with its approximately 450 million consumers, is the backbone of German prosperity. For Germany's export-oriented economy, this means:

Duty-free trade: No tariffs and no complicated customs procedures within the EU. This is of vital importance for a country whose exports account for almost 50% of its GDP.
Harmonised standards: Uniform norms and rules (from mechanical engineering to food safety) reduce production costs and create a huge domestic market for German products.
Integrated supply chains: German industry is deeply intertwined with suppliers from Poland, the Czech Republic, Italy, and France. Without the single market, these complex and efficient value chains would collapse.

2. The Euro: A shield against instability

Before the euro, the Deutsche Mark was subject to constant appreciation, which made German exports more expensive. In addition, companies had to hedge against currency risks. The euro creates a stable, large currency zone that:

reduces transaction costs.
Currency fluctuations within the Eurozone have been eliminated.
Germany is protected from speculative attacks on its national currency.

3. Global negotiating power: The EU as a megaphone

In trade negotiations with Washington or Beijing, Germany would have limited influence on its own. However, as part of the EU, it negotiates as part of a bloc with a GDP of approximately 18 trillion US dollars.

The “Brussels Effect”: Due to its market size, the EU sets global standards in areas such as data protection (GDPR), chemical safety (REACH), and increasingly, artificial intelligence. German companies benefit from the fact that their standards are de facto becoming global standards.

Enforcement power: Only the EU as a whole can impose punitive tariffs or enforce effective sanctions to combat unfair trading practices.

Why the EU needs Germany: The stable anchor at its center

Without Germany, the EU would be a ship without an engine or anchor. Germany's role is equally vital to the Union.

1. The economic locomotive

Germany is by far the largest economy in the EU and its most important contributor.

Growth engine: The strength of the German economy and its high demand for goods and services are driving growth in partner countries.

Anchor of stability for the Eurozone: The soundness of the German economy and fiscal policy is crucial for the stability of the entire Eurozone. The euro would be inconceivable without Germany.

Largest net contributor: Germany contributes disproportionately to the EU budget, thus financing cohesion and structural funds, which primarily benefit the economically weaker member states, thereby ensuring the cohesion of the Union.

2. The industrial and innovative heart

Germany's industrial strength, its focus on "Industry 4.0", its engineering expertise, and its research landscape are a driving force for innovation across the entire continent. Programs like "Horizon Europe" combine these strengths and enable cutting-edge European research that can compete with the USA and China.

3. Political weight and mediating role

Despite its economic dominance, Germany often acts as a mediator and bridge-builder within the EU. As a founding member and political heavyweight, it is essential for finding compromises between the 27 member states and holding the Union together in times of crisis.

A community bound by fate in the face of giants

The question is not whether Germany or the EU is strong. The reality is that only the EU, with a strong Germany at its core, can be strong, and only a Germany embedded within the EU can develop its strength globally.

Compared to the monolithic blocs of the USA and China, which shape the technological and economic competition of the future with enormous state subsidies (China) and a huge, dynamic capital market (USA), any European nation-state would have no chance on its own.

In the competition for AI, semiconductors and green technologies

Only the EU can create the necessary investment sums and the market to keep up (e.g. through the “EU Chips Act”).

In the debate about trade rules, climate policy and resource security

Only the EU as a single entity can effectively represent its interests.

The relationship between Germany and the EU is therefore not a partnership of convenience, but a partnership of shared destiny. The praise is not directed at either one alone, but at their inseparable symbiosis. They are Europe's answer to a world in which size and unity are more crucial than ever before.

Suitable for: