Germany’s industry under pressure from rising Chinese competition

German manufacturers are confronting a deepening rivalry with China across automobiles, machinery and chemicals. Trade data show Chinese imports rose 8.8 % in 2025 to €170.6 billion, more than double German exports to the Far East, pushing the trade deficit with China to €89.3 billion. Chinese‑made cars accounted for 2.3 % of new registrations in 2025, increasing to 3.7 % in the first half of 2026, while Chinese firms, backed by state subsidies, have overtaken Germany as the world’s leading exporter of industrial machinery.

Economist Martin Gornig of the DIW warned that “technology openness is the downfall of the German industry,” urging a shift toward niche, specialized technologies and a “competitive trade policy” that could include temporary special tariffs. He stressed that “the answer is always niche.” Meanwhile, Esther Goreichy of the Berlin Institute for China Research described the pressure as “already felt across the entire industrial core of Germany.” Industry groups such as the VDMA call for stronger anti‑dumping measures, market monitoring and possible compensatory duties on third‑country imports.

The consensus is that Germany must move away from blanket protectionism and instead target strategic sectors for investment and policy support to retain its industrial edge.