German Companies Face Heightened Competition from Chinese Firms in 2026

German businesses are increasingly experiencing substantial competitive pressure from Chinese companies, according to a recent survey conducted by the German Chamber of Commerce (DIHK). About two-thirds of surveyed German firms acknowledge this trend, with 33% reporting being 'strongly' or 'very strongly' affected. This pressure is particularly acute among industrial firms, where 83% report feeling challenged by Chinese competition. Volker Treier, head of DIHK's foreign trade department, described the competition from China as reaching a "new dimension," with German companies losing market shares not only domestically but also within the EU, China, and third-party markets.

Several factors underpin China's growing competitive edge. The undervalued Renminbi coupled with state subsidies enables Chinese exporters to operate with advantages. Additionally, China is closing the gap in innovation and quality, traditionally dominated by German firms. This convergence, alongside Germany's rising costs for energy, labor, and regulation, intensifies the challenge.

The economic consequences are evident, as Germany's trade deficit with China is projected to soar from 14 billion euros in 2019 to over 90 billion euros by 2025. Exports from Germany to China fell by approximately 12% in the first half of 2026, while imports from China increased by nearly 9%. This trend is pronounced in Nordrhein-Westfalen (NRW), a key industrial region. NRW’s exports to China decreased by around 10% in 2025, with imports growing steadily. NRW companies, especially those involved in machinery and chemicals, are responding by focusing on innovation, cost-cutting, and entering new markets. About one-third of companies are also expanding partnerships with Chinese firms, underscoring resilience in the face of mounting competition.

German companies express a strong desire for unified EU action against these competitive challenges. Sixty-seven percent favor joint foreign economic policies targeting China, and 55% support stronger trade measures despite potential drawbacks. There is a substantial call within the business community for reducing strategic dependencies on China and addressing competitive distortions through EU-level interventions. These concerns also featured in international discussions at the recent G20 finance ministers' meeting, where many members supported addressing non-market-based practices employed by China, although China resisted certain proposed language.

Looking ahead, the German government is expected to unveil a new strategy on China in October, aiming to better position German industries amid evolving international economic dynamics.