It is worth understanding that so much of what we understand as secularization Germany has deep roots, roots which were all well in place by the time of your 1888 point of departure.
That said, I do have to think that your statement might be understood in relative terms - in more than one respect. Relatively, Germany by end of the 20th century in your timeline is one of the least religious in Europe, but strikes me as likely to be at least somewhat, modestly, more religious Europe than one of our timeline. Germany in your timeline still suffered through two major wars, but societal self-confidence would not seem to be called into as deep a question when you actually WIN your two wars, or manage to avoid having large swaths of your urban landscape and civilian population converted into air pollution in the process thereof. Or, probably most importantly, don't have a genocidal national nightmare for a "Christian Germany" to live down. Political continuity has more of an impact on religious continuity than I think many of us like to admit . . . and Germany (esp. the eastern part) has a lot more of that than was the case in our 20th century history!
It does apply in relative terms - nowehere is as secularised as IOTL - but I think Germany is actually on track for massive secularisation for reasons that are bound up with its structure and historical experience. You make an interesting point with East Germany, but I would caution against using church affiliation as a proxy for religiosity. In my experience, East Germany is more religious than the west. What I envision for ITTL Germany is a high level of church affiliation, mainly as a legacy of the concordats. Germany's churches are bound up tightly with the state. They have an outsize influence on the media, the education system, and public welfare provision. That makes them established pillars of the community, often beloved, equally often resented (hey, Social Democrats, you're unemployed, here's some tax-funded food for your kids, now say grace first like a good boy...). But above all it makes them bland. The churches will say what is expected of them and everybody knows it.
The Catholic church comes out better - they have more of a political identity - but even here, everybopdy knows that when the Konservative Revolution was on, the sermon would mention race, fatherland, and holy duty, when the war started, it was all about blessing the emperor's arms and noble sacrifice, and during the postwar decades, suddenly it was all charity, equality and brotherly love. You are not expected to have strong feelings towards such an organisation.
By the end of the century, leaving the church is socially acceptable, but it is considered a statement. The Social Democrats and affiliated organisations offer an automatic process if you want it - fill in a form, they do the rest - but since it effectively gets you out of paying church tax, the suspicion is you are doing it for financial reasons, which is considered bad form among the bourgeois. So most Germans still are in the church, and the majority of the people attend regularly - both at Easter and Christmas.
Germany has a strong tradition of personal pietism and invented the idea of "Kulturprotestantismus". It also developed a strong Romantic bent of individual divine experience mediated through art. Both are incredibly popular and accessible, and they carry a kind of soicial cachet they don't in other areas. In fact, reading Hölderlin and meditating on the nature of the divine holon is, if anything, more respectable that joining hoi polloi in the pews on a cold Sunday morning where a civil servant reads out the regulation sermon. And of course, if you have any intellectual aspirations, you are reading historical criticism. Very few people outside the clergy read the classics of new Protestant theology, but everybody reads about Biblical archeology and the background of Scripture, even in school Religionsunterricht. Most will come away with the impression that it's "all invented to make people feel better".
Germany ITTL is a very Christian country, but it hasn't a religious bone in its body. Babies are baptised, teenagers take first communion, couples are married in church, the dying are comforted by clergy and buried with the comforting words of the pastor, but people take their moral guidance, their beliefs about the world, their politics and their spiritual experiences from elsewhere. The country still has Christian mystics, but they are mostly relegated to psychatric wards.
Worth thinking about, too, how having major countries in Europe (e.g., Britain, France) manage to avoid participating in these wars altogether and how interaction with those societies helps shapes Germany's (and Austria's). In our timeline, no one escaped.
I see the main effect being that the countries spared the impact remain more traditionalist, more entrenched in their ways, and doing with far less government intervention in their lives and structures. You still have village communities made up exclusively of families living in the same cottages for four or five generations, landlords who own entire districts, and old boys' clubs where regional policy is made over port and cigars, or wine and hors d'oeuvres. The welfare state is far less pronounced, taxes are lower, and Manchester liberalism is a respectable political view. Obviously, you cannot escape the twentieth century, but it runs much less deep here.
Now . . . in our timeline, the Ottomans never really had Kuwait in the first place. Under Sheikh Mubarak, they became a British protectorate (1896-99) after a century of basically independent existence....the 1913 Anglo-Ottoman convention recognized a sort of Ottoman sovereignty which seems to have been entirely theoretical before the war nuked it anyway. Granted, Mubarak comes along after your POD, but I suppose I am making a natural assumption that no butterflies would get down that way in that first decade.
That said, Iraq is much more hugely important, and keeping control of that obviously has an enormous set of impacts.
Good point - I was going by my 1912 atlas, but obviously it wasn't really Ottoman any more. Unsurprising. Iraq should be enough, though.
How do minorities and German population of immigrants descendents fall under this? Like Jews, Muslims, Chinese, Africans so forth. Can I also ask do Jews also adopt the local state identity as well Like do prussian Jews exist and do they also love militarism like other prussians and look down upon south Germans.
Prussian Jews absolutely do exist. There is an established, large, influential and wealthy community of bourgeois Jewish families who speak German, think German, and share all the traits of their Christian fellows. As barriers to advancement are removed, they become nobility, officers, government officials and civil servants in exactly the same way all other Prussian haut bourgeois do. They are proud of their military service, excel at educational attainment, proudly display their medals and degrees, and they are just as irreligious, Romantic, and arrogant as everybody else in their poisition. They look down on South Germans the same way they look down on (shudder) Ostjuden. I mean, yes, fellow Jews, but really, learn proper German and get a decent haircut, this is a civilised country!
Incidentally, when Wilhelm III (or generally, the German state) wants to speak to "the Jews", those are the people it speaks to. It explains a lot about the communication issues they are having.
Really Malaysia and Indonesia. I thought aceh would have strong ottoman support. Also Malaysia muslim monarchies I assumed would support ottomans. After all they have large Chinese population, so to keep Malaysia in safe go for ottoman support.
It's not that the Ottomans would not want to support the anticolonial movements in Malaysia, it is that Malaysia's post-colonial government is too concerned over foreign influence of any kind to allow much of it. They see the Ottomans and the Chinese as equally welcome and equally problematic, try to maintain good relations with both, but prevent either from being too powerful. So they will use Ottoman influence to counterbalance Chinese, then Chinese to counterbalanbce Ottoman, then Australian and Indian to counter them both...
Indonesia has sour memories - the Netherlands are part of Germany's alliance system, so the Ottoman government here is not so much feared for providing support with string attached as it is resented for not providing it.
How does the economy of Germany and Europe/Western Europe more generally differ with the dramatically lessened damage from two World Wars?
Think of Switzerland. Much of this Europe is a lot more cash-rich, also militarily more relatively powerful, but less unitary, less centralised and more traditional. It is thus more focused on the colonies and global competition because a European war would be economically insane, having seen what it did to Germany. The result is several decades of gold-standard based, trade-fuelled low-tax prosperity, but also a halting and patchy development interrupted by intractable crises that produces resentment and anger and hobbles many nascent industries. That is why Germany, despite fighting two modern wars, can catch up with living standards in the second half of the century. Britain and France will spend the 1950s and 1960s building social and material infrastructure that Germany already has.