Economic ties between Germany and China shifted noticeably during the past year. While imports from China continued to rise, German exports came under increasing pressure.
According to calculations by the Institute of the German Economy in Cologne, German exports to China declined by about 10% in 2025, while imports from China increased by roughly 9%.
As a result, Germany’s trade deficit with China widened to approximately $97 billion. The changing economic relationship has also drawn attention at the political level. German Chancellor Friedrich Merz traveled to Beijing accompanied by senior executives from several major corporations to discuss economic cooperation and market access.
The shift has been especially visible in the automotive sector, which historically represented one of Germany’s strongest export industries. Chinese manufacturers increased shipments of vehicles and automotive components to Germany by about 9%.
Meanwhile, German car exports to China dropped significantly. Sales of German vehicles and parts in China fell by roughly one third during 2025. Researchers at the Cologne institute described the decline as an “implosion within a single year,” highlighting how quickly the balance in the market has changed.
Looking at a longer timeline reveals the scale of the shift even more clearly. Over the past three years, exports from Germany’s automotive industry to China have fallen by more than 54%.
In 2022, German carmakers exported nearly $32 billion worth of vehicles and components to China. By 2025, that figure had dropped to around $14.6 billion.
During the same period, the automotive sector’s share of Germany’s total exports to China fell sharply, declining from about 28% to just 16.8%. According to the institute’s data, more than three quarters of the overall decline in German exports to China can be traced directly to the automotive industry.
Several factors explain the change. Economists at the institute point to structural disadvantages faced by German manufacturers in the Chinese market. State subsidy programs in China, combined with what some analysts describe as an undervalued currency, have created strong competitive pressure on foreign producers.
At the same time, researchers acknowledge that Chinese companies have also made major technological progress on their own. Juergen Matthes noted that China’s advances in areas such as battery production for electric vehicles are not solely the result of government policy.