China at crossroads: What about the Asian country's future?

China currently finds itself in a phase of structural upheaval. The economy of Germany's most important Asian partner is threatening to make a hard landing, social tensions are growing and conflicts with the country's neighbors, especially Japan, are coming to a head. The Communist regime in Bejing tries to maintain control and still acts with violence against critics and oppositionals.

Our scenarios-study, carried with the Fraunhofer Institute for Systems and Innovation Research, shows that the uncertainty emanating from China has clearly increased in the recent past and that also affects other countries. For Germany that means practically: For politics and economy, but also for science the cooperation with the People's Republic is more risky. Against that background the study recommends to rethink and maybe to realign the own engagement in China.

Which developments in China are possible in the coming years and what can be the consequences for Germany? Our study shows that with six scenarios.

Following the study three scenarios are especially possible for China's future development.

In the "Status Quo scenario", China's political and economic system remains largely stable. According to this scenario, the country would continue to be a difficult, but relatively reliable partner for German companies and policy makers.

In the "Chinese Dream scenario", China's government successfully implements its ambitious economic reforms. This would make the People's Republic more of an economic competitor for Germany, although it would continue to be a growth market and stable political partner.

In the "Great Wall scenario", several of the current problems escalate, causing China to become isolated, similar to what has happened with Putin's Russia. German-Chinese relations would suffer, as would the German business community.

All of the scenarios have one thing in common: China will remain a difficult partner for Germany. That means the Federal Republic can only benefit from the coming developments if its policy makers and business community take appropriate steps now.

"The signals from China are so contradictory that it's no longer possible to discern a clear trend", emphasizes Bernhard Bartsch, Asia expert of the Bertelsmann Stiftung. Policy makers and the economy should not rely on individual forecasts, but should systematically consider a number of scenarios.

The six possible scenarios for China's future development with datas and facts about key areas, like political system, economy, innovation, digitalization or global role, can be found in our online tool (only in German). Here you can simulate all scenarios and compare your own expectations towards China with expert's scenarios.

Please find a written overview about the scenarios in our study(only in German).