German companies’ optimism about China’s economic prospects in the next six months is recovering, with half of the companies in a recent survey willing to increase investments in the country, according to the German Chamber of Commerce in China.
The report, based on a survey of business sentiment among 186 German companies operating in China in May, found that 53% of respondents are planning to increase their investments in the nation in the next two years. The survey was released by the chamber in Beijing on Friday.
Around 30% of the surveyed companies are involved in machinery and industrial equipment, while others are in automotive, mobility, business services, electronics and chemicals.
“Their business outlook regarding China is recovering, and 29% of respondents expect their industry to improve compared to the previous year, up 8 percentage points over last year,” said Maximilian Butek, executive director at the German Chamber of Commerce in China.
Furthermore, 39% of German companies operating in China projected their turnovers to increase by the end of this year compared to last year, while their anticipation of profits remains unchanged. When asked the same question last year, only 13% were expecting increased turnover, the survey found.
Despite the overall optimism, German businesses in China still face challenges, with price pressures taking centre stage as the biggest concern.
The survey comes at a time when the European Union has decided to impose additional tariffs of 17.4 per cent to 38.1 per cent on electric cars produced in China.
“The move by the European Union will not help increase the competitiveness of the industry. The market share of Chinese-made electric vehicles in Europe is still so small. There is so much more cooperation going on between China and the EU, and we need to keep pushing for fair competition,” Butek said.
He added that several German companies operating in China are utilizing the “local for local” strategy, keeping their Chinese business as resilient as possible.
China has been Germany’s largest trading partner for eight consecutive years, followed by the United States and the Netherlands. In 2023, Germany’s direct investment in China increased by 4.3 percent year-on-year to 11.9 billion euros ($12.7 billion), a record high, according to Deutsche Bundesbank, the central bank of Germany.
The automotive industry has been a highlight of Sino-German economic and trade cooperation, with the two countries continuously strengthening cooperation and jointly promoting green and low-carbon transformation of the automotive industry.
In late April, German automaker BMW Group said it plans to invest an additional \[20 billion yuan\] in its production base in Shenyang, Northeast China’s Liaoning province.
