German firms open to more investment

German companies' optimism about China's economic prospects in the next six months is recovering, with half of the companies in a survey willing to increase investments in the country, according to the German Chamber of Commerce in China.

A report based on a survey of business sentiment among 186 German companies operating in China in May found 53 percent of respondents 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 percent 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 percent of respondents expect their industry to improve compared to the previous year, up 8 percentage points over last year.

Besides, 39 percent 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 percent were expecting increased turnover, the survey found. On the biggest challenges that German businesses face in China, they said price pressures take center stage.

The survey comes at a time when the European Union has decided to impose additional tariffs of 17.4 percent to 38.1 percent 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," said Maximilian Butek, executive director at the German Chamber of Commerce in China.

Butek added that several German companies operating in China are utilizing the "local for local" strategy, and 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.

In addition, Germany is China's largest trading partner in Europe and an important investment destination, the Ministry of Commerce said.

The automotive industry has been a highlight of Sino-German economic and trade cooperation. The two countries have continuously strengthened cooperation and jointly promoted 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.