Chinese competitors are putting increasing pressure on the German economy—across industries. Two-thirds of companies now feel this, and in the industrial sector, the figure rises to 83%. A current special survey by the German Chamber of Commerce and Industry (DIHK) of around 1,300 companies in the industrial, trade, and service sectors reveals this. "Competition with China has reached a new level," says DIHK Head of Foreign Trade Volker Treier. "Chinese companies are no longer competing solely through volume and price. They are technologically strong, innovative, and increasingly internationally present. However, German companies are not burying their heads in the sand but are actively seeking their own solutions."

According to companies' assessments, Chinese providers have technologically and qualitatively closed the gap to us. For some German companies, Chinese supply chains and production sites are even prerequisites for maintaining their own international competitiveness. At the same time, the surveyed companies complain about massive price and margin pressure, high state support for Chinese competitors, and, last but not least, challenging conditions at home. In some cases, new machines from China are cheaper than repairing existing equipment in Germany.

The pressure extends far beyond China

The pressure is greatest on companies with close business ties to China: 88% of companies with their own location in China report increasing competition. However, even 38% of companies without direct business ties to China now feel the increased competition from the Far East. The competitive struggle, therefore, no longer takes place only in China but also in Germany, the EU single market, and on third markets. "The Middle Kingdom serves German companies as a sales market, procurement market, production site, partner, and competitor at the same time," says Treier. "More competition does not automatically mean less business with China. For companies, it's about holding their ground and, at the same time, continuing to cooperate where it makes economic sense."

Companies are opting for the forward escape

Withdrawing from their field of business is not an option for 88% of affected companies. Instead, 60% focus on product innovations, 50% on cost reductions, and 39% on entering new markets. Almost one in three companies is also responding with increased cooperation with Chinese partners. "This is a strong signal: Companies are not resigning to their fate," says Treier. "They are innovating, reducing costs, and exploring new markets. Competition can act as a catalyst. However, the conditions must be right, and the competition must be fair."

"Companies are not resigning to their fate. They are innovating, reducing costs, and exploring new markets."

At the same time, the companies point to problems on their own doorstep: In the open-text responses, they complain of high labour and energy costs as well as growing bureaucracy at home. "Not every competitive advantage of China is a distortion of competition—nor does every German competitive disadvantage originate from China," says Treier. "If high energy and labour costs or excessive bureaucracy are holding our companies back, these problems must be solved here. Trade protection cannot compensate for self-made location disadvantages."

Majority for stronger measures—despite own risks

From European policymakers, companies primarily expect unity: 67% demand a joint, coordinated foreign economic stance towards China, and 60% call for the reduction of strategic dependencies. 49% speak out in favour of excluding Chinese companies from critical infrastructure projects, 36% advocate stronger access restrictions to the EU single market, and 31% favour stricter trade protection measures. By contrast, 25% want trade and investment barriers to be reduced, and 18% wish for facilitated innovation partnerships.

Noteworthy is the willingness among companies to accept their own burdens for this: 55% support stronger EU measures against distortions of competition even if their own companies face disadvantages, such as higher prices, more bureaucracy, tariffs, or countermeasures. 37% reject this.

The open-text responses simultaneously show limits: While some companies demand tougher action against subsidies, dumping, or regulatory loopholes, others warn against additional tariffs and burdens. "This is not a call for a trade war," says Treier. "Companies want fair competition, not isolation. Europe must address distortions of competition decisively but must not harm itself with indiscriminate measures."

Use existing tools more effectively

From the DIHK's perspective, Europe should therefore use its existing trade policy instruments in a targeted manner. WTO-compliant trade protection and anti-dumping measures must be effective and swift where distortions of competition are proven. "Europe must be able to defend itself against unfair competition," says Treier. "For this, we must use existing instruments consistently. Above all, however, we must ensure that our companies can assert themselves internationally on their own."

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