Juergen Matthes, IW’s head of global and regional markets research and author of the report, said that while the report did not examine cause and effect, “this finding strongly suggests that China is increasingly competing with the German economy in its home market and traditional areas of strength in the European Union.” “Given the challenges of the energy revolution and the question of German competitiveness, these findings are worrying.”

Handelsblatt pointed out that this development has been occurring for many years, and other analyses have confirmed the trend. A recent study by the German Federal Agency for Foreign Trade and Investment (GTAI) said that from 2000 to 2020, China’s share of global exports increased by more than 11 percentage points to about 15 percent, while the share of the German economy almost stagnated at about 8 percent.

Mattes believes that one of the reasons for the decline in German export share in the European market is the increase in energy costs for German companies. After years of growth, Germany’s economy slipped into recession in May, with exports hit by supply chain woes, inflation and rising energy costs following the Russia-Ukraine conflict. “German companies have always had to struggle with this, but the cost disadvantage has increased considerably, especially in the energy sector.” “Mattes said.

Experts expect German companies to come under increasing pressure in export markets. Michael Pettis, a finance professor at Peking University’s Guanghua School of Management, said the Chinese government will continue to focus on boosting exports in the future, and he has “no doubt” that the pressure from “made in China” exports will continue to increase in the next two years, and “it is inevitable that China’s export share will rise and Germany’s export share will decline.”

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In addition, Mattes also pointed out that China is catching up not only in manufacturing, but also in technology, and Chinese companies are becoming more competitive in innovative products. He referred to China’s 2015 Made in China 2025 action plan, a strategy aimed at making the country a leader in key technologies.

Observers believe the car market could be the “next target” for Chinese manufacturers, according to Handelsblatt. Eunice Lee, an analyst at Bernstein, estimates that Chinese companies already have the capacity to produce about 40 million electric vehicles a year, compared with domestic demand for only 20 million to 25 million.

U.S. consumer News and business channel (CNBC) on the 15th, citing a Moody’s report, said that by the end of 2023, China is expected to surpass Japan to become the world’s largest auto exporter. China accounts for more than half of the world’s lithium supply, giving Chinese automakers an advantage in terms of production costs for electric vehicles.

While China’s share of EU imports is still small compared with Germany’s, according to IW, Chinese carmakers are clearly catching up. In 2000, China’s share of EU car imports was just 0.1%; by 2022, it had reached 3.5%.