Germany fights back as China's tech rise threatens its economic future

Germany is facing growing economic and technological pressure from China. The country’s export industry has been hit hard by competition, with job losses and shifting trade balances in 2025. The government is now taking steps to address these challenges and secure its future in high-tech fields. In late 2025, Chancellor Friedrich Merz unveiled a new high-tech agenda. The plan aims for AI-based technologies to contribute 10% of Germany’s economic output by 2030. This move follows concerns over China’s rapid advancements in research and innovation, which have pushed Germany out of the top ten in the UN Innovation Index for the first time, placing it 11th behind China.

The economic strain is already visible. German exports to China fell by 9.7% in 2025, while imports of Chinese goods rose by 8.8%. The competition has cost around 120,000 industry jobs in Germany this year alone. Despite these risks, over two-thirds of German companies still support research collaboration with China.

To counter unwanted technology and knowledge transfer, the government agreed on a research security framework by the end of 2025. The measures aim to protect critical innovations while navigating the complex relationship with China. The new high-tech agenda and research security framework mark Germany’s attempt to regain its competitive edge. The country must balance economic ties with China while safeguarding its own technological future. The coming years will show whether these steps can reverse the current trends.