German stakeholder positions on China’s role in the cleantech sector are situated among three opposing poles that form a triangle of economic interests, security requirements and climate targets. These interests and objectives are not necessarily mutually exclusive and may overlap, but they may just as easily conflict.
Economic interests: China is particularly significant for major players as a market and technology partner
For decades, the Chinese market was a major sales market for German companies. German technology was developed at home, produced cheaply in China, and then sold worldwide. This division of labor was a recipe for economic success. With manufacturing facilities in China since the 1980s, German firms played a key role in making Germany one of the world’s largest exporting nations.
Today, trade relations between Germany and China have changed fundamentally. Germany’s decades-long trade surplus with China shifted to a deficit of EUR 89 billion in 2025, and China is now competing with German firms in the very same market segments that Germany previously dominated.4 Many of the driving forces behind the German economy remain firmly rooted in China. This also applies to companies in the cleantech sector. Today, however, German firms are represented in China not only by production facilities but also by research and development centers, and they maintain essential technology partnerships with Chinese companies.
Although the economic future of these firms in China now appears more tenuous, and even the view of large corporations regarding China is shifting, many continue to invest in the People’s Republic to maintain their position within the Chinese network of suppliers, and to benefit from the local innovation ecosystem. German firms also consider it important to maintain a presence in the Chinese market in the future, particularly in view of competition in third markets.
Industry representatives do not necessarily interpret the term de-risking as diversification of suppliers, but primarily as a strategic shift of production to alternative locations to mitigate the negative effects of trade barriers and boost their own competitiveness. A few selected quotes from the interviews conducted for this report illustrate this:
For automotive companies, de-risking means being less dependent on geopolitical measures. — Paraphrased from a confidential expert discussion5
“In China for China. That’s the only way to make headway in the current pricing landscape.” — Ola Källenius, CEO, Mercedes-Benz6
“We are deeply rooted in China and understand customer needs and market dynamics. The combination of German engineering, China’s extensive supplier network and local innovation creates a unique global advantage.” — Oliver Zipse, CEO, BMW7
“China is no longer just a manufacturing hub, but a global powerhouse for innovation. […] We are investing heavily and will continue to do so, […] and Bosch will optimize its presence to maintain its competitive edge.” — Stefan Hartung, CEO, Bosch8
However, even among companies that have been active in China for a long time, the mood is shifting in the face of shrinking market shares, particularly in the cleantech sector. German car manufacturers are being squeezed out of the electric vehicle sector by domestic manufacturers, and in the green energy sector, Chinese manufacturers generally have the upper hand for reasons of cost and procurement. This cut-throat competition is reflected equally in quarterly results in both China and Germany. While, for example, Mercedes’ latest electric vehicle sold only a few hundred units in China in the first half of 2026, Xiaomi – a company that only entered the market two years ago – delivered tens of thousands of models per month.9
German SMEs in particular feel under threat, as they are often unable to manufacture in China and benefit from low production costs. This is where the most critical voices on China are found.
Due to the comprehensive subsidy regime, we cannot compete with Chinese rivals. Even if we were to manufacture in China, we would not be able to benefit from the same level of capital subsidies and export support. So, does EU industry need protection from Chinese competition? Yes, because we are not competing with a single company, but with an entire economy. — Paraphrased from a confidential expert discussion
Security concerns: China’s investment and export strategy poses risks to Europe’s sustainable energy supply
Since at least the start of Russia’s full-scale war on Ukraine in 2022, many stakeholders in Germany have also become acutely aware of the risks of one-sided supply chain dependencies, particularly in the energy sector. The disruption to global oil supply chains due to the Iran war have once again highlighted this risk.
Reducing the share of fossil fuel sources in Germany’s energy mix – as the acting Federal Minister for the Environment, Carsten Schneider (SPD), has also stated10 – would make Germany less dependent on foreign energy suppliers. At the same time, however, there are complex security concerns regarding Chinese involvement in the European economy in general, and in Germany’s energy supply in particular. These include, for example, cyber-security risks arising from the use of Chinese technology for critical infrastructure, like wind farms.11
Competition from heavily subsidized Chinese companies is another cause for concern among German suppliers, as domestic firms are unable to match low Chinese prices. They fear being squeezed out of their home market. Furthermore, Germany and the EU face the threat of a gradual loss of manufacturing expertise and technological sovereignty in certain sectors – and thus of industrial independence from China.
There is also a dependence within cleantech supply chains, particularly when it comes to rare earths. The consequences of this became very apparent when China imposed export controls on rare earths in April and September 2024.12 Germany imports 47 percent of its rare earths needs from China, and this figure is rising.13 Further job losses are to be expected in industry. German industry is estimated to be losing 15,000 jobs per month – a trend that could continue if cut-throat competition persists.14
Various organizations and companies take a security-critical approach to China. These have often never had a presence in China or they have been squeezed out of the Chinese market due to Beijing’s support for domestic firms. Critical voices are also coming from trade associations and trade unions, whose members are already feeling the full force of competitive pressure from China.
In politics and policy-related research, security aspects of doing business with China have been the subject of more intensive debate for several years – yet there is still a lack of uniform and binding approaches to this challenge. A general strategy of de-risking – selectively reducing dependencies on China without fully decoupling – has been advocated, for example, by German Chancellor Friedrich Merz (CDU).15 In most cases, this approach is not clearly defined, although there have been some specific decisions to reject Chinese technology in favor of German suppliers. Following sharp criticism from political and security circles, for example, the offshore wind farm operator Luxcara awarded a contract to Siemens Gamesa instead of the preferred Chinese supplier Ming Yang.16
The line between acceptable risk and strategic vulnerability in the energy sector has not yet been definitively established and remains a matter of debate. It is becoming apparent that even a partial exclusion of Chinese components and products is likely to significantly increase the costs of Germany’s energy transition to renewables. Industry representatives are calling for systematic political support so they can compete with Chinese rivals:
“Following the solar sector, we are now exposing another future-oriented technology [wind energy] to the risk of falling victim to unfair competition. That cannot happen. If Germany aspires to be a frontrunner in green technologies, then we must back this up with clear political will.” — Jürgen Kramer, Deputy Chairman, IG Metall17
“Any project that receives even a single euro from European funding schemes should be obliged to purchase the technology in Europe as well. […] As European companies, we cannot participate in China. We are denied this. On the other hand, we are still too naïve in Europe.” — Nils Aldag, CEO, Sunfire18
“Europe is the only continent that invites manufacturers from all over the world to offload their excess capacity here – and even subsidizes them to do so. […] Support should explicitly be given to companies that generate the bulk of their value added in Europe. France and Poland have already clearly aligned their funding regulations accordingly.” — Thomas Heim, Manager – Climate Solutions, Carrier (manufacturer of heat pumps, among other things)19
Climate targets: Decarbonization will be more expensive without affordable Chinese technologies
As part of its climate protection program adopted in the spring, Germany’s center-right and center-left government coalition (CDU/SPD) set itself the target of reducing CO2 emissions by 25 million tonnes by 2030. In order to achieve this and its other climate targets, Germany will need to make considerable societal and economic efforts. This is because simply reducing fossil fuel usage in the power supply is not enough – passenger and freight transport, as well as industry, must also decarbonize.
In this context, China’s range of renewables, batteries and electric vehicles (EVs) is unbeatable on price. Technologically, depending on the sector, the quality is comparable to Germany and therefore very attractive. It is thus crucial that policymakers also provide regulatory support and create effective incentives for the domestic economy. Among other things, the framework conditions for expanding renewable energy must be optimized. Take, for example, Germany’s current auction design for wind farms. In this process, sites are allocated through competitive bidding. This means that the developer who offers the highest sum may develop the site. The developer will therefore seek to reduce construction costs and tend to purchase cheaper Chinese turbines.
“Governments wish to maximize revenue through auctions. This auction design exerts price pressure on wind farm developers, who consequently switch to Chinese suppliers or pass the pressure on to European manufacturers, who in turn offset the higher prices by importing Chinese components. — Paraphrased from a confidential expert discussion
Partly because development cycles are often shorter, innovative solutions reach the commercial market more quickly in China than in Germany. Representatives at one research institute consider cooperation with China to be essential given the rapid pace of innovation in cleantech:
It is no longer possible to work without Chinese institutes. Innovation and research have reached a pace that is hard to imagine outside China. The scale achieved in China can be seen as an opportunity: technologies and production techniques can reach Germany more quickly and cheaply, thereby driving forward the energy transition. — Paraphrase from a confidential expert discussion
Climate research organizations and companies in the renewable energy sector also regard failing to decarbonize as a significantly greater risk than collaborating with Chinese suppliers. These stakeholders often view security risks a manageable – such as grid outages caused by Chinese components that have been tampered with. The following quotes illustrate the tension between risk awareness and competitiveness:
“By opting for the world’s most powerful offshore wind turbine [MingYang], we will be able to accelerate Germany’s energy transition while fostering much-needed competition in the industry. In any case, the management, operation and control of the Waterkant wind farm will remain entirely in the hands of an independent German company.” — Holger Matthiesen, Project Manager at Luxcara July 2, 202420
“The target of 15 million electric vehicles by 2030 can only be achieved with the involvement of Chinese manufacturers. An increase in import duties on Chinese vehicles would lead to significantly higher financing requirements for the roll-out of electric mobility.” — Study by Agora Verkehrswende21