The German Engineering Federation (VDMA) issued a statement claiming that competitors from China have received substantial government subsidies, and some products exported to Europe do not comply with EU technical standards.

VDMA calls on German and European policymakers to take action to ensure a level playing field for European and Chinese companies. VDMA Chairman Bertram Kawlath emphasized that the European side has long demanded equal competition, yet this request has been consistently ignored by China, turning the term “equal competition” into an empty phrase.

Thus, VDMA demands effective measures to enforce fair competition within the EU internal market, highlighting that German enterprises have suffered from ongoing violations by China in international trade.

Specific proposals by VDMA include imposing compensatory tariffs on imported products that violate EU anti-subsidy and anti-dumping regulations, enhancing market surveillance, and penalizing certain Chinese manufacturers exporting non-compliant machinery products to Europe. It also suggests requiring third-party certification for companies with a history of non-compliance before they can export to European markets, with repeat offenders losing their export privileges.

To maintain the competitiveness of European firms, VDMA urges the EU to bolster the local machinery manufacturing industry and recommends the use of “industrial policy tools” to support strategic technologies in defense, climate, and energy. The statement notes that government procurement of such products should consider not only price but also the “reliability of suppliers” and appropriately introduce “local production percentage.”

This industry organization, which includes over 3,600 machinery manufacturing companies, warns that although many German firms still hold a slight technological lead over their Chinese counterparts, the sustainability of this advantage relies on increased government support for industry innovation, particularly in research and development. Additionally, the EU should ensure that the results of government-funded R&D do not inadvertently leak to countries like China.

Furthermore, VDMA demands that the German government clarify which machinery products should be restricted from export to China, as current uncertainty disrupts deliveries to the Chinese market, with approval processes often taking months. Especially as Chinese competitors are now able to produce comparable products, quicker responses are necessary.

The requirements also include gaining a stronger voice in setting technical standards, accelerating free trade agreements with countries outside of China, reducing bureaucratic processes, and lowering corporate tax burdens. Before issuing this statement, VDMA consulted with many member companies regarding the challenges posed by Chinese competitors and the desired support from politics.

In the first quarter of this year, the delivery volume of the German machinery manufacturing industry in China plummeted by 12.2% compared to the same period last year, amounting to €3.99 billion. The international market share of the German machinery sector slightly decreased to 15.2% from 2013 to 2023, while the share of Chinese companies surged from 14.3% to 22.1%.

Earlier this year, VDMA's General Manager for China, Claudia Barkowsky, stated in an interview that due to the prices offered by Chinese competitors, which are sometimes 50% lower, it will become increasingly difficult for German machinery engineering companies to compete. A survey by the German Chamber of Commerce in China (AHK China) also revealed that over half of the German companies operating in China expect that their Chinese competitors will become the leaders in innovation in their industry within the next five years.