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German exports pivot to Eastern Europe amid drops in US and China

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Central and Eastern Europe is becoming increasingly vital for the German export sector amid declining shipments to China and the US.

While German exports to the world’s two largest economies have dropped significantly in recent times, rising exports to Central and Eastern Europe have more than offset these losses.

Trade with the Visegrad Group countries in particular is expanding with considerable strength, according to German Foreign Policy.

In the first half of 2026, German exports to Poland grew by 9.2%, while exports to the Czech Republic rose by 14%.

During the same period, exports to China fell by 12.4%, and exports to the US contracted by 6.5%.

Germany currently exports nearly 50% more goods to Poland than it does to China.

The German Eastern Business Committee describes the region as a “key region for German exports” and is demanding the expansion of the EU single market through the admission of eastern and south-eastern countries into the EU.

At the same time, China’s economic influence in Eastern Europe is also expanding. However, Chinese companies are not merely competing with German firms; they are also becoming increasingly integrated into European production chains.

The EU and its neighbourhood carry great weight for German industry

An intensifying international competitive environment is elevating the importance of the EU single market for the German export sector.

In 2024, just under 54% of all German goods exports went to EU member states. In 2019, this share stood at approximately 51%.

The five largest export markets within the EU in 2024 were France, with goods valued at 111 billion euros; the Netherlands, with 105 billion euros; Poland, with 90 billion euros; Italy, with 78 billion euros; and Austria, with 72 billion euros.

Approximately 52% of Germany’s exports to the EU consisted of intermediate goods, such as metals, basic chemicals, or electrical components, which undergo further processing in other EU countries, often at the foreign facilities of German companies.

Capital goods, such as machinery and equipment, accounted for 17% of exports, while consumer goods comprised approximately one-third.

The growing concentration on Europe carries certain risks. Because the German economy had diversified its trade heavily towards Asia, it was less affected by the eurozone crisis than other EU member states.

The decline in this geographical diversification heightens the vulnerability of the German export model to crises.

The export boom in Eastern Europe

Central and Eastern European countries in particular managed to compensate for the declines in exports to China and the US.

One reason for these declines is that the People’s Republic of China has begun producing domestically many high-tech products previously imported from Germany; another is that exports to the US were adversely affected by Trump’s tariffs.

Cathrina Claas-Müller, chairwoman of the German Eastern Business Committee (OA), told the Handelsblatt newspaper: “Central and Eastern Europe has become a key region for German exports.”

While the volume of German exports to China and the US fell overall by just over 10 billion euros, Central and Eastern Europe more than made up for these drops with an increase of approximately eleven billion euros.

Claas-Müller emphasised that “Central and South-Eastern Europe […] cannot, of course, replace China and the US.” However, she stated that recognizing the region’s importance for Germany’s economic development is vital.

For this reason, the chairwoman argued that the European single market must be expanded rapidly towards the east and south-east so that the region’s potential can be utilized in the best possible way, even beyond existing EU borders.

The OA chairwoman stressed that progress in EU accession negotiations conducted with Ukraine, Moldova, and the Western Balkan countries must be “courageously seized.”

Germany’s industrial core: the Visegrad countries

Within Central and Eastern Europe, the Visegrad countries (Poland, Hungary, the Czech Republic, and Slovakia) occupy a prominent position.

These countries have become some of the most critical manufacturing hubs worldwide for German industry.

From Germany’s perspective, these countries offer several investment advantages: geographical proximity to Western Europe, a well-developed industrial infrastructure, an extensive pool of skilled labour, and relatively low wage levels.

German companies maintain a strong presence in this region across core sectors such as mechanical engineering and the automotive industry, alongside the chemical and electrical sectors.

In the first half of 2026, German exports to China fell by 12.4% compared with the same period of the previous year, while exports to the US declined by 6.5%.

In contrast, German exports to Hungary rose by 6.7%, exports to Poland grew by 9.2%, and exports to the Czech Republic increased by up to 14%.

From January to June, Germany exported goods worth 53.8 billion euros to Poland. Exports to China, by comparison, reached only 36.3 billion euros.

This means Germany exported nearly 50% more goods to Poland than to China.

Poland has ranked as the fourth most important market for German companies since 2024; China currently sits in only ninth place.

Even the Czech Republic, a much smaller country, came close to China with 30.3 billion euros in German exports.

Poland between Germany and China

At the same time, Poland is also increasing its imports from China.

In the first half of the year, the country imported German goods worth 43.1 billion euros (18.6% of total imports) and Chinese goods worth 36.7 billion euros (15.9% of total imports).

The US ranked third, with imports valued at 12.7 billion euros (5.5% of total imports).

In July, for the first time, more goods were shipped to Poland from China than from Germany.

A tripartite trade pattern is becoming increasingly pronounced in Poland: China is gaining importance as a supplier of electronics, automobiles, and other consumer goods, while Germany retains its central position in terms of investments and European production chains.

In parallel, Germany remains the undisputed leader when it comes to Polish exports: Poland exported goods worth 59.7 billion euros to Germany. This figure constitutes 26.3% of Poland’s total goods exports.

Czechia and France follow, each accounting for approximately 14 billion euros.

Competition and division of labour between Germany and China

Chinese companies in Central and Eastern Europe are not solely competing with German firms.

This dynamic is clearly visible in the German automotive industry’s network in Hungary. In 2022, Contemporary Amperex Technology (CATL), the Chinese firm that is the world’s largest battery manufacturer, announced that it would establish a new factory in Debrecen in eastern Hungary.

CATL also supplies batteries to companies including BMW, Mercedes, Volkswagen, and Stellantis, which manufacture in Hungary as well.

In 2023, other Chinese companies, such as Huayou Cobalt and Sunwoda Electronics, also invested in Hungary.

In 2024, Eve Energy joined this trend by establishing a factory to supply BMW.

The integration of Chinese car manufacturers and suppliers into European automotive production has now become a widespread strategy to address the automotive crisis.

In Spain, France, and Italy, Stellantis plans to utilise idle production capacity by building models for Chinese companies Leapmotor and Dongfeng. Leapmotor models will be produced at Stellantis plants in Madrid and Zaragoza.

Plans in France call for the joint production of an electric car with Dongfeng, while in Italy, joint production of a compact electric car with Leapmotor is planned.

Production of an Opel SUV using Chinese technology is also planned in Madrid.

Volkswagen’s new strategy likewise aims to produce VW models previously sold only in China for the European market.

The plan to bring its Chinese models to the European market involves both imports from China and, at a later stage, the manufacturing of the vehicles or their components in Europe.

General decline in German exports

German exports contracted unexpectedly in August due to a sharp drop in shipments to the US.

This development revealed that momentum in the eurozone’s largest economy waned following a robust first half of the year.

According to data released on Thursday by the Federal Statistical Office, exports fell by 0.8% compared with the previous month.

The outcome fell short of the 0.6% increase forecast in a Reuters poll.

Carsten Brzeski, global head of macroeconomics at ING, said: “Trade is the area where Germany’s resilience is faltering.”

Brzeski noted that while German exporters benefited in the second quarter from Asian rivals being more heavily affected by the closure of the Strait of Hormuz, the third quarter has so far experienced a setback.

Volker Treier, head of foreign trade at the Association of German Chambers of Commerce and Industry (DIHK), said: “The current decline shows that the recovery in exports is merely a light breeze.”

Imports rose by 0.9% on a calendar- and seasonally adjusted basis compared with July.

Consequently, Germany’s trade surplus narrowed from 21.6 billion euros in July to 19.5 billion euros in August.

Despite rising prices caused by the Iran crisis and uncertainty triggered by US tariffs, the German economy demonstrated resilience in the first half of the year.

Germany grew by 0.4% in the first quarter and by 0.3% in the second quarter.

Europe

Vučić scrapped plan to hold power after phone warnings, report says

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Former Serbian President Aleksandar Vučić was preparing to retain power by force following the country’s parliamentary elections, according to a report by the British newspaper The Times, citing politicians and a former commander of a specialised police unit.

However, he abandoned this scenario after receiving phone calls urging him to back down.

Spasoje Vulević, the former head of the Serbian police counter-terrorism unit, told the newspaper that 4,000 police officers and 3,000 people whom he described as “thugs” were deployed to central Belgrade on voting day, 25 October.

According to Vulević’s assessment, Vučić was preparing to reject the election results.

Vučić’s spokeswoman denied the claim. Speaking to The Times, she said the police presence in Belgrade was a response to threats of violence from protesters and was unrelated to any attempt to seize power.

Member of the European Parliament Sandro Gozi also said he received alarming messages from diplomatic sources on election day indicating that Vučić was preparing for a scenario involving the use of force.

According to the newspaper, Gozi’s political group issued a statement around 21:00 local time, as initial projections were being released, warning that supporters of Vučić’s party could be mobilized to provoke clashes.

Where did the calls forcing Vučić to back down come from?

Radomir Saičić, a leading candidate from the winning Student List, also argued that plans had been made to alter the results by force if the vote margin between the sides was narrow.

“If the results were close, there were plans to overturn the outcome of the vote by brute force,” Saičić said. “However, according to the information I obtained, numerous calls to him from the police and other figures prompted him to change his mind. They convinced him that executing this plan would end very badly for him.”

Former commander Vulević, on the other hand, was sceptical that police officers could have played a decisive role.

Noting that Vučić personally selected the unit commanders in Belgrade and that these figures were unlikely to oppose him, Vulević said: “I suspect that representatives of European governments called Vučić; these were talks conducted at the highest level.”

European Parliament member Gozi did not confirm the claim that the telephone calls had a decisive effect.

“I cannot rule out the possibility that phone calls took place, but in any case, the vote margin against him was far too large,” Gozi said. “Vučić was stunned.”

According to The Times, roads were closed in Belgrade during the evening, gendarmerie personnel appeared on the streets, and groups of men dressed in black headed toward the city’s Pioneers Park (Pionirski Park).

Vulević claimed these individuals arrived in groups of 20 to 30. However, the newspaper reported that at 21:30, an hour and a half after polls closed, Vučić backed down and his assembled supporters dispersed.

From the Novi Sad collapse to early election defeat

Early parliamentary elections were held in Serbia on 25 October.

According to Election Commission data, after processing results from 8,139 ballot boxes, the Student List secured 52.65% of the vote, while Vučić’s United Serbia coalition remained at 39.22%.

Vučić conceded defeat without waiting for the final results.

“It is obvious that we have lost these elections. The Student List has won,” the politician said, attributing the opposition’s success to support from European countries and the US “deep state”.

Prior to the election, the country was the scene of prolonged mass protests that began after the collapse of a railway station canopy in the city of Novi Sad in November 2024.

Protesters initially demanded accountability for those responsible and an investigation into corruption allegations, before subsequently calling for the government’s resignation.

Having dissolved parliament in September 2026 and announced his resignation from the presidency, Vučić was subsequently nominated as the candidate for prime minister by his party.

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EU scrambles for takers for remaining €21B in SAFE defence loans

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The European Commission has until the end of the year to convince EU member states to take up around €21 billion in unused defence loans and support Ukraine’s defence.

The worsening security situation in the Black Sea could encourage Romania to seek additional loans. Bucharest has already secured €16.7 billion under SAFE.

The remaining figure became final after Hungary and Italy significantly scaled back their requests under the EU’s €150 billion Security Action for Europe (SAFE) programme.

On Wednesday, after approving Hungary’s spending plan, the final pending application, the Commission announced that it would soon launch a second call for applications.

The situation is very different from August 2025, when Brussels was confident that demand would far exceed the available €150 billion.

Applications from 19 EU countries eventually exceeded that sum by around €40 billion.

Now, national elections and pressure on public finances may make governments reluctant to take on additional debt.

Some EU diplomats told Rapporteur that the conditions for the second round remain unclear, making it difficult to say whether their countries would apply.

The Commission must publish the second call by the end of December. Unlike the first round, where countries could use the loans for national procurement contracts until May 2026, the remaining money must be spent on joint procurement.

Poland benefited from the previous flexibility, securing €43.7 billion, the largest national allocation, and moved quickly to sign contracts.

Warsaw announced that 90% of the money would go to Polish companies.

Brussels also hopes the remaining money will be used to bolster Ukraine’s defence.

In July, during an official visit to the country, Commission President Ursula von der Leyen suggested that around €10 billion in unused SAFE loans could be directed to Kyiv.

Defence Commissioner Andrius Kubilius mentioned the Freyja anti-ballistic missile project among the initiatives under consideration while discussing the second SAFE call at an E5 meeting in Paris this week.

Military sources told Rapporteur that participation in the second round had been considered under Romania’s previous government, but the proposal would now require a fresh political assessment.

Diplomatic sources in Athens told Rapporteur that Greece has also shown interest. The country had previously made an unsuccessful push to increase its allocation by several billion euros.

Polish Deputy Defence Minister Magdalena Sobkowiak-Czarnecka told Polish media this week that Poland was also discussing the conditions for another possible application, while Ireland has shown interest in the remaining funds.

Italy, having already reduced its initial request, is considered unlikely to participate in the second round.

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EU prepares Ukraine peace mission to Abu Dhabi led by Björn Seibert

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The European Union is preparing to take a direct role in the diplomatic negotiations surrounding the war in Ukraine.

According to a report by Euronews television, the European Commission and the European Council are establishing a joint delegation of high-ranking officials to attend an upcoming round of talks between the parties. Björn Seibert, the head of cabinet to European Commission President Ursula von der Leyen, will lead the delegation.

The German diplomat, described in the report as an influential bureaucrat, is expected to head the team attending the talks scheduled to take place in Abu Dhabi in early November.

“We are strongly committed not only to ending the war, but also to achieving a just and lasting peace. This is our goal, and this is precisely the position we defend in the current talks,” a European Commission representative said in a statement on the matter.

Brussels’s key figure behind the scenes

A European bureaucrat of German descent, Björn Seibert has long been recognized as von der Leyen’s closest aide.

Seibert first joined von der Leyen’s team in 2013 during her tenure as Germany’s defence minister, later moving with her to the European Commission.

According to reporting by Politico magazine, Seibert gradually developed into one of the most powerful figures behind the scenes of European politics.

The magazine noted that Seibert has been directly involved in clearing senior appointments and has played an influential role in managing relations with both the European Parliament and the US.

This setup has also sparked controversy within the institution. Critics claim that concentrating power in the hands of the cabinet chief and von der Leyen leads to excessive centralization in administration, whereas supporters argue the model ensures rapid, efficient decision-making.

If these multilateral contacts materialize to bring together delegates from Europe, Ukraine, the US, and Russia under one roof, they will mark the first talks held in this specific format during the peace process.

Diplomatic engagements so far have been conducted either bilaterally between Russia and the US or as trilateral meetings that included Ukraine.

However, the EU delegation’s participation at the negotiating table is not yet finalized, as the issue remains under consultation.

European capitals have actually spent months searching for a similar diplomatic channel. Politico reported in January that EU member states had discussed appointing a special envoy to lead talks with Moscow over Ukraine, an effort backed by French President Emmanuel Macron and Italian Prime Minister Giorgia Meloni.

The Telegraph newspaper reported in October that, alongside Meloni, Finnish President Alexander Stubb, Czech President Petr Pavel, Norwegian Prime Minister Jonas Gahr Støre, and Danish Prime Minister Mette Frederiksen were being mentioned for the European representative role.

The newspaper noted that officials were also weighing the option of creating a joint delegation of representatives instead of choosing a single figure.

Reservations from Moscow over European intentions

Moscow, for its part, views Europe’s position as potentially decisive in resolving the conflict. “It is not enough to talk only with Kyiv; it is necessary to talk with the whole of Europe, which fully backs Kyiv in its desire to prolong the conflict. Perhaps Europe’s stance is of key importance here,” Russian Presidential Aide Yuriy Ushakov said.

Kremlin spokesman Dmitriy Peskov also stated that Moscow would support the emergence of an EU negotiator. “Having a negotiator is good. If that negotiator genuinely seeks to contribute to a peaceful settlement, it would be much better,” Peskov said.

Conversely, Russian Foreign Minister Sergey Lavrov struck a cautious tone on 27 October regarding European countries’ interest in joining the talks. Lavrov stated that Europe wants a seat at the table without altering its outlook toward Moscow.

Arguing that Europe disregards Russia’s position on the root causes of the conflict, Lavrov emphasized that European nations do nothing beyond levelling accusations and demanding a halt to hostilities.

“This merely demonstrates the Europeans’ desire to join the negotiation process. However, the positions with which they would enter the process remain a major question mark,” the Russian minister said.

Despite these conflicting signals, Russian President Vladimir Putin previously noted that Moscow has not closed the door to dialogue with European nations.

As a preferred European negotiator, Putin previously named former German Chancellor Gerhard Schröder.

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