German industry is increasingly coming under pressure from the economically strengthened competition from China. While German exports fell by 1.7 percent to around €1.65 trillion last year, China recorded export growth of 7.1 percent to more than €3 trillion. Experts cite aggressive price competition by Chinese suppliers in their domestic market and structural overcapacities increasingly pushing into global markets as key reasons for this development.
For the eighth year in a row, China managed to increase its exports, while Germany experienced a decline. This trend is also reflected in the automotive sector: Volkswagen delivered about 1.5 million fewer vehicles in 2024 than it did six years earlier — a significant drop mainly due to weak sales in China. Chinese manufacturers now dominate, particularly in the electric vehicle segment, where German companies like Volkswagen have lost significant ground.
This shift is also evident at trade fairs. While only 500 Chinese exhibitors were present at the Hannover Messe in 2014, the number has more than doubled recently. China’s goal of becoming the world’s leading technology nation by 2049 no longer seems unrealistic, especially in the fields of digitalization and artificial intelligence. Economists emphasize that Chinese companies have already surpassed the technological capabilities of German firms in certain areas.
China’s industrial strength is partly the result of a decades-long policy of self-empowerment, which involved attracting foreign companies to transfer their know-how. This strategy is now bearing fruit. In contrast, industrial production in Germany has been declining for years, partly due to high energy costs. This trend particularly threatens energy-intensive sectors such as basic chemicals and the automotive industry.
At the same time, experts warn of risks in the Chinese model. The enormous debt of the private sector — now exceeding 300 percent of GDP — is fueling concerns of potential financial crises. Many Chinese companies focus on scaling, operate without profits for extended periods, and flood the global market with low-cost products after building excessive production capacity. This becomes especially problematic for German firms when Chinese providers can match them technologically while producing at much lower costs.
Behind these economic dynamics lies a broader conflict. The systemic competition between China and the West, particularly the United States, is increasingly being decided through technological rivalry. Tariffs are just one of the current instruments through which this competition is being expressed.
