Rising Share of Global Market by Chinese Industry - Rapid Growth Bolsters China's Domination of Global Market Share
In a report published by the Prognos Institute in Munich, the authors have highlighted the increasing competition between China and Germany in the global market, particularly in advanced manufacturing sectors. According to the report, China's industrial strategy, once encapsulated in "Made in China 2025," has evolved into a broader, AI-driven, green-energy-powered push for global leadership.
The USA's increasing isolation from the rest of the world is contributing to this intensified competition, as protectionist measures in Western markets push China to diversify its export destinations, particularly towards emerging economies in Asia, Africa, and Latin America.
The global manufacturing landscape is becoming increasingly contested, with supply chain fragmentation, techno-nationalism, and concerns over Chinese industrial overcapacity creating a volatile environment. China's share of global exports has risen sharply, reaching 14.7% in 2024, up from 12.8% in 2017, largely due to competitive pricing and product quality across a wide range of sectors.
The report provides a sector-by-sector analysis of the competition between China and Germany. In the automotive sector, China leads in EV scale and cost, while Germany retains its premium branding but faces pressure on margins. In mechanical engineering, China is closing the quality gap, while Germany maintains an edge in high-end, customized solutions. In electrical engineering, China dominates volume, while Germany focuses on high-margin, complex systems. In electronics, China is ahead in scale, while Germany is competitive in specialized, industrial applications. In optics, China is gaining in mass-market optics, while Germany holds premium segments. In vehicle construction, China is strong in volume and emerging markets, while Germany excels in technical niches and premium segments.
South Asia represents a significant growth opportunity for both Chinese and German exporters. China's Belt and Road Initiative has deepened infrastructure and trade links with countries like Pakistan, Bangladesh, and Sri Lanka, creating demand for Chinese machinery, vehicles, and electronics. Germany's reputation for quality and reliability gives it an advantage in premium sectors, but cost-sensitive markets may favor Chinese suppliers.
Latin America and Africa are also becoming key battlegrounds. China is redirecting exports to these regions to offset reduced access to Western markets, particularly the US. Germany, meanwhile, may leverage its technological leadership and sustainability credentials to win contracts in green energy and advanced manufacturing.
The report also highlights potential risks and mitigation strategies. Both China and Germany face rising trade barriers, with China diversifying its export markets to mitigate this risk and Germany adapting to new competitive dynamics in Asia and beyond. Overcapacity concerns could lead to further protectionist measures in Europe and other regions, with the EU already seeking "fair competition" and potentially imposing tariffs or other barriers on Chinese goods. Technological leadership remains a key differentiator, with Germany's tradition of innovation and engineering excellence under pressure from China's rapid scaling of green tech and AI-driven manufacturing.
In conclusion, the competition between China and Germany is intensifying across all major industrial sectors, with China leveraging scale, state support, and technological ambition, while Germany relies on precision, quality, and innovation. The prognosis is for sustained rivalry, with both nations seeking to expand their global footprints—especially in emerging markets—amid a fragmenting and protectionist global trade environment. Success will depend on each country's ability to adapt to local market needs, navigate geopolitical tensions, and maintain technological edge.
In this evolving industrial landscape, both the Community policy and Employment policy of Germany are expected to play crucial roles in maintaining its competitive edge against China. With China's dominance in volume production in sectors like electronics and vehicle construction, Germany's Employment policy should focus on fostering innovation and expertise in specialized, industrial applications to stay competitive. Moreover, the German government could leverage the country's Finance sector to invest in research and development for green energy and advanced manufacturing, aligning with the global trend and remaining competitive in emerging markets.
