The economic and technological relationship between China and Germany in recent years has been a delicate balance, marked by opportunities for cooperation and at the same time by structural challenges that reflect the internal conditions of both countries in a turbulent global framework.

Germany, historically one of Beijing’s main European trading partners, is now experiencing a redefinition of this dynamic, especially under the pressure of changes in key industrial sectors and the start-up ecosystem.

China: the structural limits of the ‘world factory’

Despite being the world’s second largest economy and the largest global manufacturing hub, China has shown worrying signs of a structural slowdown .

In the first half of 2025, China’s GDP growth reached 5.3%, slightly exceeding expectations, but difficulties such as the low domestic consumption rate (around 40%), falling real estate prices and high youth unemployment, officially estimated at around 15% in urban centres, remain evident.

Policies to stimulate consumption are still in place, but the cultural immobility of high savings and the demographic challenge – with the birth rate down to 1.2 children per woman and a rapidly ageing population – threaten to further slow growth, which is expected to fall below 3% in the long term.

Added to this is an economic model that is increasingly characterised by state control and the limitation of the private sector, not insignificant factors that hinder innovation and market flexibility.

In fact, fewer innovative start-ups were born in the last two years in huge China than in tiny Germany.

Germany: between ailing industry and changing start-ups

Germany at first historically withstood the so-called ‘China shock’ that had hit the US hard in the 2000s, thanks to a robust export sector in sectors such as automotive and machinery.

However, since 2020, the picture has changed dramatically: Chinese imports into Germany have increased rapidly, growing by 60 per cent in two years, while German exports to China have dropped, especially in the industrial sector starting with cars.

Chinese competitors in the field of electric cars, aided by heavy government support policies and the resulting competitive prices, have significantly eroded German trade shares.
In the machinery sector, Germany even became a net importer from the East, reversing a ten-year trend.

In the field of start-ups, Germany is second only to the UK in Europe in terms of number and volume of investments, with cities such as Berlin standing out as leading technology hubs.

The competitive context, however, sees China playing an emerging role, especially in digital technologies, green energy, and AI: suffice it to think of the promising results of DeepSeek, which is already the third most accessed language model in the world after ChatGPT and Gemini (even though it boasts only 1/17 of the accesses of the former and just over half of the accesses of the latter).

Chinese start-ups, in short, are growing rapidly despite (or perhaps because of) the commercial and technological restrictions imposed by the United States.

Competition or collaboration?

The technological and commercial rivalry between China and the West, mainly understood as the United States and Europe, strongly influences the Sino-German relationship.

Berlin, like many European countries, balances the need to maintain strong economic relations with Beijing with the need not to compromise European technological and industrial security.

US restrictions on the sale of advanced artificial intelligence chips to China have prompted Beijing to develop a vibrant domestic ecosystem, but dependence on Western production remains a limitation.

In addition to traditional industrial sectors, Germany is closely observing the growth of Chinese start-ups in cutting-edge sectors such as AI, electric vehicles and smart manufacturing, phenomena that represent both a challenge and a possible opportunity for targeted collaborations.

China is not yet a global superpower

Despite the size and importance of its economy, China is not yet a global superpower in the full sense. Its internal criticalities – declining demography, economic rigidity, low consumption growth, technological slowdown also due to strong state control – limit its full emergence as an autonomous world power.

Geopolitical pressures, ongoing trade tensions and a growing vulnerability to global economic changes contribute to a picture of great potential but also of strong structural fragility, which is reflected in the relationship with sophisticated partners such as Germany, seeking a balance between competition and collaboration.

Thus, China continues to play a central role in the global chessboard, but on many levels remains an evolving player rather than an established power.

Germany, for its part, faces the challenge of maintaining its competitiveness in a world increasingly influenced by the rise of China and geopolitical uncertainties. Start-ups and technological innovation in the two countries are critical nodes in this unfolding economic and geopolitical game.