A recent study warns that the German economy would take a hit from a decoupling with China as well as other significant economic nations outside of the EU.

The report – prepared by the Austrian Institute of Economic Research for the Foundation for Family Businesses – found that decoupling from China would result in a 2-percent reduction in Germany's real GDP.

Severing value chains with the U.S. would cause a reduction of around 3 percent in real average income in the short term for the German economy, it said.

In light of the study's findings, Gabriel Felbermayr and his co-author Oliver Krebs warned that decoupling scenarios could have negative effects on the economy.

They said policymakers should approach the issue with caution, especially when implementing measures in the context of the EU's new trade policy doctrine that emphasizes strategic autonomy.

A potential decoupling will affect trade between China and Germany, with the study estimating that decoupling from imports from China would cost 22 billion euros ($24.1 billion) while decoupling from exports would cost 37 billion euros.

China has become Germany's most important trading partner for the seventh consecutive year. In 2022, the total trade volume between China and Germany reached 298 billion euros, according to German official data.

It is of great significance to Europe to seize the opportunity of China's reopening from the COVID-19 pandemic and cooperate with China, Wu Baiyi, former director of the Institute of European Studies, Chinese Academy of Social Sciences, wrote in a commentary on China-US Focus.

He said that China's industrial strength, market size and consumption potential are attractive to Europe, and cooperation with China will help Europe get rid of its current economic difficulties.