The approach to dealing with China is a matter of controversy. Political warnings about the risks of German companies' close economic integration with and in China stand in contrast to the clear commitment of key industries such as automotive, mechanical engineering, or chemistry to the world's second-largest economy. This is evident in the current German direct investments in the sometimes called Middle Kingdom, which reached a new record value of around 12 billion euros last year. Nonetheless, recent developments indicate that China's grip on its position as Germany's primary trading partner has been tenuous. Its standing is now almost level with that of the US. This is primarily due to the fact that imports from China decreased by almost one-fifth in 2023.

The downturn also prompts attention in light of the fact that certain imports from China are increasingly raising concerns. If these imports do not include electric and digital products in the broadest sense – which are not produced locally or in Europe anyway – the price advantage of Chinese offers is seen in a different light. The recent announcement by the EU Commission to investigate the "unfair" competition posed by Chinese automakers, who threaten to inundate the European market with new electric vehicles at significantly lower prices than the domestic automotive industry, has garnered attention. The Commission suspects a distortion of competition due to state subsidies in China and warns of "measures", potentially including trade barriers.

Likewise, the German retail sector expresses concerns about being flooded with inexpensive Chinese products, especially textiles. These businesses also highlight unequal competitive circumstances, citing the necessity for German textile vendors to comply with the regulations of the new Supply Chain Act. This compliance entails effort and unavoidably results in increased product costs. Enforcement of such supply chain hygiene and other standards against Chinese competition is challenging. The surge of goods arriving in Germany from China overwhelms customs capacities significantly, necessitating the establishment of additional new control authorities.

However, the retail sector and automotive industry are not entirely aligned in their response to Chinese competition. While both face competition and pressure, the revenue and profit of major automotive companies are more heavily reliant on the sales of their vehicles in China than in retail. Nonetheless, China also holds significant weight for the retail sector, at least in the luxury segment. The price advantages of Chinese companies are particularly pronounced in Germany, as domestic companies are grappling with a cost increase in materials and labour costs due to inflation. Additionally, regulatory-related expenses further compound the situation.

Dealing with such diverse cost structures is a side effect of globally open markets, which German companies have compensated for over the years through innovation and a lead in quality. The difficulty in distinguishing between industrially motivated subsidies and dumping is also not a new revelation. The significance of the current situation arises less from escalating dumping on the one side and a surge in costs and regulation on the other. Instead, industries like the automotive sector, and not just this one, are in danger of squandering their lead in quality and innovation. Chinese firms, supported by targeted state funding, have caught up, notably in the automotive sector but also for some time in telecommunications technology, battery technology, and partially in mechanical engineering. They are increasingly competing with German rivals on equal footing and with cost advantages. Protective tariffs will not halt this development in the long run. It is up to the companies themselves to take action.