The German model has collapsed! The biggest accident of the conflict between Russia and Ukraine!

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Source: Mi LAN investment (wechat ID: mikuangtouzi) author: Mi LAN Lao a has been authorized to reprint

Russia’s cheap energy, Germany’s industrial manufacturing and China’s vast market are the keys to the continued prosperity of Germany’s economy in the Russian German China triangular economic model. Now this business model is collapsing.


Germany’s industry is suffering a catastrophe.

The shortage of energy and soaring electricity prices have made German industrial enterprises face the most severe situation since the subprime mortgage crisis in 2008.

A survey is shocking. Under the pressure of rising energy prices, 16% of German industrial enterprises plan to reduce production, 25% have reduced production, and 25% are reducing production… Among them, energy intensive enterprises such as steel making / glass / paper making / chemical industry have been particularly affected.

BASF, the world’s largest chemical giant and a German enterprise, warned that it would further reduce its production on the basis of the earlier reduction;

Mittal, Europe’s largest steel group, said it would idle a blast furnace in Germany indefinitely from the end of September;

The lehr steel plant in Bavaria, Germany, directly announced an indefinite shutdown;

The leaders of German industrial enterprises such as Bayer, Merck, LANXESS and Henkel are all suffering from energy shortage;


Germany’s annual GDP of more than $400 billion includes $2 trillion of economic added value and $20 billion of natural gas supply from Russia. The leverage is more than 200 times… Now with the sanctions against Russia after the conflict between Russia and Ukraine, this lever may break.

At the end of August, the agreed delivery price of Germany was benchmarked against the European benchmark, which has soared from 90 euro / MWh last year to 1050 euro / MWh, with a cumulative increase of 1067.67% at the end of the year.

With the soaring energy and electricity prices, Germany’s CPI is hitting a new high in more than 70 years.

CPI rose by 7.9% in August, exceeding 7% for six consecutive months and 5% for ten consecutive months… Allianz research in Germany even predicted that food prices would rise by 10% this year.

At the end of July, the IMF lowered Germany’s economic growth forecast in 2022 from the previous 2% to 1.2%, and the economic growth in 2023 from the previous higher than 2% to 0.8%, which is the largest reduction among all G7 countries.

Why has the German economy been hit so hard? Because of Germany’s excessive dependence on Russian energy.

With the increasingly severe sanctions imposed on Russia by Europe and the United States after the conflict between Russia and Ukraine, Russia is significantly reducing or even completely stopping its energy supply to Europe as a counterattack.

Even the Deputy Chancellor of Germany said that the German business model mainly relies on cheap Russian natural gas, and now this model has failed and will not come back.


How much does Germany depend on Russian energy?

One third of Germany’s oil and more than half of its natural gas supply come from Russia

Germany is also the largest natural gas buyer in Russia, with an annual payment of up to 20 billion US dollars.

At present, the natural gas pipeline from Russia to Germany mainly has two channels, one is the Beixi No. 1 channel crossing the Baltic Sea, and the other is the land channel passing through Poland / Ukraine.

Beixi No. 1 is now in overload operation, and the land channel has made Russia afraid because of the tension with Ukraine / Poland. Therefore, Beixi No. 2 parallel to Beixi No. 1 was built in 2011.

This new pipeline, with a total length of 1230 kilometers, a total investment of 11.5 billion US dollars, and an annual traffic volume of 55 billion cubic meters, was actually completed in September 2021. It was already ready for gas transmission and was only waiting for final acceptance. However, it was suspended because of the outbreak of the Russian Ukrainian conflict in February this year, leaving the gas transmission pipeline for Germany, which took eight years to build, idle.

In order to counter the sanctions imposed by Europe and the United States, Russia has continuously reduced its oil and natural gas supply to Europe, but the result has been a sharp rise in oil / natural gas prices. On the contrary, Russia, an energy exporter, has made a lot of money, and this has provided strong financial support for Russia’s military attack on Ukraine… That is to say, Europe and the United States have not sanctioned Russia, but have helped Russia.

On September 2, the group of seven and the European Union (including Germany of course) stated their position and decided to impose a price limit on Russian oil and natural gas… Among them, it is planned to limit the price of Russian oil exports to $44 per barrel (the current oil market price is about $90 per barrel), in order to combat Russia’s ability to obtain military funds by selling high-priced oil.

Then, Russia stopped the natural gas transportation of Beixi No. 1 on the ground of “technical failure” requiring maintenance, and did not mention the recovery time.

What is the result?

The price of natural gas in Europe has further soared. The important thing is that there is no gas available, and Germany has the greatest impact.

The conflict between Russia and Ukraine did not collapse Ukraine or Russia, but the seemingly unrelated third party Germany collapsed first, which was indeed beyond everyone’s expectations.

In fact, another key to the collapse of the German model lies in China.


Since 2016, China has replaced the United States as Germany’s largest trading partner, and has become Germany’s largest trading partner for five consecutive years. Since 2000, the trade volume between Germany and China has increased tenfold, from more than 20 billion US dollars to 245 billion US dollars last year.

Among them, Germany’s pillar industry, the automobile industry, is particularly dependent on China… 40% of Volkswagen’s cars, 24% of BMW’s cars and 26% of Mercedes Benz’s cars are sold to Chinese customers. Other German advantageous industries, such as machinery and chemicals, are also heavily dependent on China.

Over the past decades, Germany’s economy has continued to prosper. After the bursting of the Internet foam in 2000, the global financial crisis in 2008, the European debt crisis in 2012, and the impact of the COVID-19 epidemic in 2020, it still stands firm. The secret to consolidating and improving Europe’s position as an economic locomotive lies in the operation of the three corner business model of Russia Germany China Railway.

We import a large amount of cheap natural gas / oil and other energy from Russia, borrow China’s strong supply chain to obtain upstream products, process them in Germany into high-quality goods, and then export them to China in batches to earn huge foreign exchange.

In the past Merkel era, the German government was well aware of the interests of the triangular business model of Russia Germany China, and had been striving to find a balance during the period. Whether it was the Russian Crimea crisis in 2014, the Sino US trade friction in 2018, and the Taiwan / Tibet related issues earlier, Merkel could always mediate and maintain the operation of this business model.

All this has changed. It is less than a year since Merkel left office. The key node is the conflict between Russia and Ukraine that broke out earlier this year.

On February 24, Russia took special military action against Ukraine. Immediately after that, European and American countries, including Germany, condemned “Russia’s acts of aggression”. In addition to providing economic assistance / military weapons / military command training to Ukraine, they also continuously increased various sanctions against Russia.

Behind the conflict between Russia and Ukraine, in essence, is a proxy war between Russia and NATO. Germany, one of the NATO members, and its new prime minister Scholz did not mediate. On the contrary, under the pressure of voters, they repeatedly pressured Russia and finally angered Putin, which resulted in the current cut-off of gas in Europe and the rise of energy prices.

On the other hand, it offended Russia and cut off the supply of low-cost energy. On the other hand, it tried to provoke China and was not afraid of losing its vast market.

After the conflict between Russia and Ukraine, China has always remained neutral. However, Europe and the United States, including Germany, forced China to follow the sanctions against Russia and classified China and Russia as “non democratic” autocratic countries. Germany even followed the lead of the United States to help contain China.

In December 2021, the German “Bavaria” frigate sailed into the South China Sea, which was the first time that a German warship sailed into the South China Sea in more than 20 years;

Since August 15, Germany has successively sent several warplanes to the Asia Pacific region to participate in the US led “fast Pacific 2022” multilateral joint military exercise in a high profile;

From August to September, Germany will participate in the two western led military exercises “operation pitch black-2022” and “kakadu-2022” in the Asia Pacific region;

In early October, Germany will also carry out joint flight operations with the Singapore Air Force and pay short-term visits to Japan and South Korea:


Germany is being held hostage by the White left democratic values of Europe and the United States, completely ignoring its own interests, and has become radical and rash without the sound diplomacy of the Merkel era.

It never occurred to me that Germany, which was still holding out in the Russian Ukrainian conflict but was unable to fight, collapsed first. This has also become the biggest accident in the Russian Ukrainian conflict.

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