China shock: Germany faces rising competition from Chinese industry

German exports to China fell 9.3% in 2025, and the country's annual trade deficit with China reached about €89 billion.

China was long a major market for German industry, but recent years have seen Chinese firms move into higher-tech manufacturing and compete directly with German suppliers. That shift has affected companies large and small, contributing to weaker exports and wider imbalances. Chancellor Friedrich Merz is preparing an inaugural visit to China this month as commercial ties evolve. Key facts: - German exports to China fell 9.3 percent in 2025, according to preliminary data. - Germany's annual trade deficit with China reached about 89 billion euros in 2025, a record in preliminary official figures. - Small and medium-sized German manufacturers report growing competition from Chinese firms; some firms have licensed technology to local companies rather than selling directly. - Chancellor Friedrich Merz is due to visit China this month to discuss trade ties and concerns about market practices. Summary: The changing competitive landscape has added pressure on German manufacturers and contributed to a notable trade imbalance. Mr. Merz's upcoming trip will center on these commercial issues and on concerns about market access and fair rules.