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May 2025 [German Foreign Policy]Over the past two decades, China has managed not only to catch up with a growing number of technologies, but even to reach a global top position. An early example was solar cells, in which Chinese companies displaced German competitors, among others. Already in 2022, the International Energy Agency (IEA) reported that the world market share of the People's Republic of the entire supply chains for the production of solar panels is now more than 80 percent.[ 1] The situation is similar in the production of batteries for electric cars. According to the IEA, more than 70 percent of all electric car batteries ever produced were produced in the People's Republic, so Chinese companies have built up immense know-how and also benefited from highly integrated supply chains, which today allows them to achieve prices of 20 percent under North American and 30 percent below European production.[ 2] Another example is shipbuilding; according to the Washington Center for Strategic & International Studies, the People's Republic now holds a world market share of 53.1 percent in this field and has thus declassed South Korea (29.1 percent) as well as Japan (13.1 percent). 3]
China's catch-up to the top has long since reached the most advanced high-tech industries. In January, for example, it was announced that the Chinese company DeepSeek has developed an AI model that is on an equal e- mage to the leading model of the previous Western leader OpenAI, ChatGPT, but at the same time causes many times lower costs.[ 4] Ex-Google CEO Eric Schmidt recently admitted that the latest version of the model is currently the best in the world.[ 5] China has long been ahead in the installation of industrial robots. According to the International Federation of Robotics (IFR), a total of 276,288 industrial robots were installed in the People's Republic of 2023 - 51 percent of the total number worldwide.[ 6] Almost half of this came from Chinese production. Japan was clearly in second place with 46,106 pieces, ahead of the USA (37,587), South Korea (31,444) and Germany (28,355). Even the whole of Europe taken together, with 92,393 pieces, did not even reach a third of the Chinese value. Meanwhile, the People's Republic is even catching up with semiconductors, which were previously considered its greatest weak point. For example, Huawei has developed AI chips that can replace semiconductors previously considered unrivalled by the US company Nvidia. They are now to be transferred to mass production.[ 7]
A similar development is currently emerging in the conversion to the use of green hydrogen as an energy carrier. In the production of electrolysers, which are needed to generate green hydrogen from renewable energy, German companies such as ThyssenKrupp Nucera or the startup Sunfire hope for a strong global market position. Recently, the prospects for this have deteriorated because the use of green hydrogen is hardly coming off the spot not only in Germany, but also in the EU as a whole; some energy companies, such as the Norwegian Statkraft, are already stopping corresponding projects.[ 8] The German industry had until recently relied on being able to obtain a leading position in new hydrogen projects in Saudi Arabia in the amount of ten billion US dollars. For the post-oil era, Riyadh relies on renewable energies, which it has in enormous quantities. Now, however, it is clear that the majority of the hydrogen business goes to the Chinese competition. Beijing is driving up the hydrogen industry at a rapid pace, which ensures advantages of scale for local companies. Their offers are therefore "up to 15 percent cheaper ... than those of the competition", it is said; German companies would probably have to settle for "a few smaller orders" in Saudi Arabia.[ 9]
With a view to China's rapid technological development, German industry representatives are pleading for cooperation with the People's Republic of Germany not only maintaining cooperation with the People's Republic of China, but possibly even expanding it. The country is "an essential market" - not only because of its sheer size, but above all "in terms of innovative strength", Holger Klein, CEO of the automotive supplier ZF Friedrichshafen, recently stated. With a view to China's rapid technological development, Klein stated that although his market is "highly competitive and exhausting", but at the same time "a fitness room for us" - those who have "reached a good form" there are "also competitive in other markets". 10] This is essential; because even if the EU isolates itself against Chinese electric cars - in China there will be "new competitors ... that we will meet again elsewhere in the world, perhaps not in Europe, but in Brazil, Mexico or Thailand". For this reason, ZF Friedrichshafen strives not to lose its connection in the People's Republic, but rather to continue to grow. At the moment, the Asia-Pacific share is around 23 percent, the China share is just under 20 percent, both of course with an increasing trend: "We are increasing our China share very deliberately."[ 11]
China's technological catch-up has now led to the fact that Chinese weapons systems are superior to European products for the first time. As military experts confirm, in the recent arms war between India and Pakistan, the Pakistani Air Force shot down at least two, perhaps even more, Indian fighter jets - surprising, because the Pakistani armed forces were considered by experts as underseat in advance. The launch was achieved by a J-10C fighter jet produced in China, which hit at least one, possibly even several Indian fighter jets of the Rafale type with a PL-15 rocket also manufactured in China. The Rafale comes from French production; it is equipped with French Meteor rockets, which did not succeed in firing a Pakistani machine.[ 12] According to reports, the J-10C had already proven to be superior to the European aircraft last year in a maneuver in which Pakistani pilots fought with it against the Eurofighter of the Qatari Air Force, "both in close and long-range combat", as it is said. The Eurofighter, partly produced in Germany, had lost the practice fight against the J-10C "zero to nine". 13] "China is building better systems that are also cheaper," says an expert. 14]
This could soon have an impact not only on arms exports, with which Western corporations not only earn a lot of money, but also make armed forces in third countries a certain dependency on the West. Indonesia is reportedly already considering canceling its Rafale orders. 15] Above all, however, with the assessment that the J-10C is superior to European fighter jets, for the first time the possibility that the West, should the escalating conflict with China lead to a march of arms, will no longer go to war with over- but with undersigned weapon systems against the emerging great power, for which the Bundeswehr has also been preparing for a long time with its Asia-Pacific maneuvers (german-foreign-policy.com reported [16]). From a German point of view, a third lost world war would no longer be unthinkable.
[1] Solar PV Global Supply Chains: Executive Summary. iea.org.
[2] Teo Lombardo, Leonardo Paoli, Araceli Fernandez Pales, Timur Gül: The battery industry has entered a new phase.
[3] Matthew P. Funaiole, Brian Hart, Aidan Powers-Riggs: China Dominates the Chipbuilding Industry. csis.org 25.03.2025.
[4] From Stargate to DeepSeek.
[5] Eric Schmidt, Selina Xu: DeepSeek. Temu. TikTok China Tech Is Starting to Pull Ahead. nytimes.com 05.05.2025.
[6] Record of 4 Million Robots in Factories Worldwide. ifr.org 24.09.2024.
[7] Liza Lin, Raffaele Huang: China's Huawei Develops New AI Chip, Seeking to Match Nvidia. wsj.com 28.04.2025.
[8], [9] Kathrin Witsch: This is how the Chinese competition conquers the market for hydrogen. handelsblatt.com 23.05.2025.
[10], [11] "Without China it will be very, very difficult". Frankfurter Allgemeine Zeitung 28.04.2025.
[12] Martin Benninghoff, Mathias Peer: China celebrates fighter jet deployment against India as a "deepseek moment". handelsblatt.com 05/22/25.
[13] China's fighter jets depend on the European ones in air combat. t-online.de 05/23/2025.
[14] Brandon J. Weichert: Indonesia Is Having Second Thoughts About the Dassault Rafale Fighter. nationalinterest.org 21.05.2025.
[15] Resty Woro Yuniar: Indonesia's costly bet on French Rafale jets under scrutiny after India-Pakistan aerial clash. smcp.com 14.05.2025.
[16] S. on this Europe's role in the war against China and war exercises in the Pacific.