The competition between Germany and China in the European Union markets is becoming increasingly fierce. Germany is seeing a reduction in its export shares, while China is on an upward trajectory. The two countries have been increasingly converging in their export profiles over the years, competing in several product categories, particularly in automotive, mechanical engineering, and chemical sectors. Although Germany still holds a higher import share in EU countries compared to China, its lead is diminishing.
A recent study by KfW Research sheds light on the competitive landscape between China and Germany in the European Union markets. Dr. Dirk Schumacher, Chief Economist of KfW, stated, "China is working to export its own excess capacity. In this effort, Europe is now moving more into the focus of the People’s Republic because the conditions for selling in the US are rapidly deteriorating."
Dr. Schumacher emphasized the need for Germany to "create a favorable business environment and make the economy competitive in order to respond to growing competitive pressure from China as well as from other countries."
From 2012 to 2024, the value of imports from Germany to other EU member states dropped from approximately 33% to 29%. Meanwhile, China's share increased from around 1% to 4%. Specifically, Germany's share of engineering products decreased from 30% in 2012 to 28% in 2024, while China's increased from 7% to 10%. In the chemical sector, Germany's imports fell from 22% to 18%, whereas China's rose from 2% to about 6%.
In 2024, goods exported from Germany to other EU countries accounted for approximately 54% of its total exports, while China exported 11% to these countries. German enterprises anticipate the rivalry with Chinese businesses to further intensify. Over the years, China has diversified its exports, decreasing the share of labor-intensive goods and reducing trade in merely assembled goods from 55% in 2001 to 20% by 2024.
The study, along with a position paper titled "Managing the transition, strengthening growth,” is available for download, providing analyses and recommendations for Germany’s economic strategies.