Several measures have been taken both on the political and business level to navigate the increasing competition from China in the mobility sector. To avoid becoming overly dependent on battery supply chains, for instance, Chinese producers are incentivised to invest in battery plants in Germany. Battery maker CATL has built a plant in Arnstadt in the federal state of Thuringia, producing battery capacity for at least 200,000 EVs per year and supplying also European car makers.¹¹

The plant is considered by many a positive example of what future cooperation strategies with China could look like: by bringing Chinese innovative tech to Germany or Europe, local producers and universities can work closely with Chinese counterparts on domestic soil, avoiding unwanted tech transfer and other supply chain risks arising from German companies’ localisation in China. During his visit to Beijing in February 2026, Chancellor Merz also called for more Chinese investments in Germany: “We want jobs in Germany with Chinese investments”, he stressed.¹² However, it remains unclear how it will be ensured that local German stakeholders benefit from the investments.

Mechanical engineering and automation: Increasing competition with China for global market shares

For a long time, China has depended on German high-tech machinery to innovate its industry. The case of Chinese takeover of German robot maker Kuka in 2016 marked the beginning of a changing of tides and China’s rise in robotics. Ever since, the German industrial automation industry has come under increasing pressure in the competition for global market shares. Faced with the “Buy China” trends, German companies in the sector also increasingly feel compelled to localise in China and enter into cooperative arrangements with domestic players.

“Made in China 2025” targeted exactly those areas in which Germany used to be a technological frontrunner, like industrial robotics, high-end computerised machines, high-performance medical equipment or advanced railway transportation equipment. At the time, Beijing’s industrial innovation strategy was welcomed by many German actors as a booster for more mutually beneficial cooperation in the targeted sectors. The ambition never really materialised. Instead, China has reached its goal of becoming a global leader in key manufacturing sectors in many areas. According to the German Engineering Federation (VDMA), Chinese machinery manufacturers delivered goods worth EUR 20 billion to the EU in 2018. That figure has reached EUR 48.7 billion in 2025.¹³

Even though Germany still exports more machinery to China than vice versa (2025 exports: EUR 16.2 million, imports: EUR 11.9 million)¹⁴, VDMA, an association for the machinery and equipment manufacturing industry in Europe and Germany, has called for improved conditions and deep reforms in Germany to prevent more research and production from being relocated to foreign countries.¹⁵

Green and climate tech: the predicament of an industry falling behind

China has become a dominant producer of climate technology, one of the fastest growing industry sectors, reaping growing shares of the estimated five-billion-dollar revenues worldwide.¹⁶ Germany – once the home of “solar valley” in the country’s east – has fallen behind. China’s high innovation speed and competitive pricing of relevant products is also increasing German dependency on wind turbines, photovoltaic and energy storage equipment from China. German companies in the sector are in a predicament: So far, there is no solution of how to gain access to Chinese innovation while at the same time protecting Germany’s industry from competitors that provide low-cost and high-quality solutions also due to ample financial support by the Chinese state.

According to a study published by the Boston Consulting Group (2025),¹⁷ Germany is losing competitiveness in the field of environmental technologies to China. Obstacles include high electricity prices, lengthy approval procedures, and a lack of investment incentives for companies. According to the study, China spends more money on environmental technology than other regions of the world, invests more quickly, and is thus consolidating its control over value chains in green technology. “For the first time, the epicentre of innovation is shifting from traditional Western centres to China,” the study states.

Science and research: a scientific community that wants engagement despite risks

Science and research on the academic level are areas where China remains keenly in-terested in collaborating with German counterparts. In recent years, the debate over risks emanating from research collaboration has gained traction: cases of alleged bribery of German professors (RWTH Aachen)¹⁸ or the explicit warnings by the German intelligence service against science espionage from China in its yearly reports have raised eyebrows. There is increased risk awareness in fields like quantum or AI.

However, this heightened risk perception collides with a continuously high interest on the part of German scientists to continue established collaboration with Chinese counterparts. The focus of these collaborations clearly is on STEM and subject matters that are at the core of China’s innovation strategy. According to 2025 figures,¹⁹ 205 German institutions of higher education maintained collaborations with 338 Chinese counterparts. China continues to be attractive due to its high pace of innovation, a highly motivated and flexible talent pool, and generous funding for research areas prioritised by Beijing’s innovation agenda.

In a recent survey of the research organisation Max Planck Gesellschaft, 55% of respondents stated that science collaboration with China was “important and even essential” for their research. According to that same institution, more than 3,700 joint publications were published by MPG and the Chinese CAS alone.²⁰

German universities and research associations have launched programs²¹ to increase China expertise and published guidelines so that researchers can develop an informed approach and develop strategies for risk management, e.g., of technology and knowledge outflow, lack of access to jointly developed research data, or dual use.