Beijing, May 12 - Business confidence among German companies operating in China has strengthened compared with a year earlier, according to a survey of 216 firms carried out by the German Chamber of Commerce in China. The results point to a more positive short-term economic outlook and a renewed inclination to increase investment in the region despite ongoing geopolitical and trade-related pressures.
The survey found that 37% of respondents expect China’s economy to improve over the next six months, a rise of 22 percentage points from the prior year. By contrast, only 17% anticipate a deterioration in China’s economy over the same period, a marked decline from the 56% who expected worsening conditions in 2025.
Investment intentions have also firmed up. Nearly two thirds of the firms surveyed - 61% - plan to raise investments in China within the next two years. That share compares with 53% a year earlier and represents the highest level recorded since 2023. Conversely, 11% of respondents said they plan to reduce investments, three percentage points lower than in 2025.
Despite the improved sentiment and investment appetite, firms reported substantial operational effects from external geopolitical events. Three quarters of those surveyed said the Iran war has affected their business, with the principal consequence cited being higher logistics costs. Trade tensions are similarly influential: more than two thirds (69%) reported being affected by U.S.-China tensions, while over half (59%) cited impacts from EU-China tensions.
Those mixed pressures have not erased expectations for revenue and profit growth. Some 42% of companies expect turnover to be higher by the end of the year, up from 29% in 2025. Meanwhile, 29% of firms anticipate increased profits, a gain of 11 percentage points from the prior year.
Views on industry trajectories are split. A third of respondents (34%) foresee an improvement in how their industry will develop, while roughly the same share (33%) expect conditions to worsen. The survey captures a business community that is more optimistic than a year ago about near-term economic trends and more willing to commit capital, even as logistics and operational costs are squeezed by conflict and trade frictions.
Bottom line: German firms in China report brighter near-term economic expectations and stronger investment plans, but significant risks from the Iran war and trade tensions continue to affect logistics and operations.