Inside a more-than-100-meter hall, hundreds of robots hum while lights blink and warning signals chirp. Only about a dozen people work the floor; high-performance machines do the rest. Journalists are rarely admitted to this high-tech plant, and when they are, cameras are taped over and audio recordings need approval.
The secretive factory is not in China but in Arnstadt, in Germany’s Thuringia. It belongs to CATL, the Chinese world leader in electric-vehicle batteries. The site produces about 14 gigawatt-hours (GWh) of battery capacity a year — enough for at least 200,000 electric cars — supplying European automakers. Making batteries in Germany shortens transport for heavy, flammable cells and reduces geopolitical risks such as punitive tariffs. At the same time, the plant reflects shifting trade ties between China, Germany and the EU.
How “Made in Germany” helped China to the top
For decades, the “Made in Germany” label was a benchmark for modern manufacturing in China. Volkswagen’s 1980s joint venture in Shanghai impressed Chinese partners, and later Germany’s push for digitally networked production under Industry 4.0 offered another model. China’s manufacturers, eager to move beyond a low-cost image, embraced these approaches.
In 2014 the two countries signed cooperation agreements, and in 2015 Beijing launched “Made in China 2025” to modernize industry and win global leadership in key sectors. By many measures China has since achieved those aims. Oliver Wack of the German Engineering Federation (VDMA) notes that Chinese machinery exports to the EU rose from €20 billion in 2018 to €40 billion in 2024 and could reach €50 billion this year, even while Germany still exports more machinery to China.
In green technologies the pressure is especially strong. China’s solar and wind capacity now exceeds that of all other countries combined; it holds about 70% of the global drone market and is similarly expanding in electric vehicles.
Technology transfer: China’s fast track
Shortly after announcing “Made in China 2025,” Beijing introduced measures that helped Chinese firms acquire advanced technologies and even whole companies in Europe. Analysts warned this could bring short-term gains but long-term risks for Germany and the EU. The 2016 takeover of German robotics firm Kuka by China’s Midea Group became a symbol of those concerns.
Some observers were skeptical that China could overtake Germany quickly. Clas Neumann, then vice president at SAP, said in 2016 that China would need “at least 20 to 30 years” to master certain processes. China accelerated that timeline with heavy investment in research: R&D spending rose from 1.37% of GDP in 2007 to 2.56% in 2022, financed largely by corporate profits and government subsidies. State support quadrupled between 2014 and 2024 and now nearly matches U.S. research subsidies.
Camille Boullenois of the Rhodium Group says massive subsidies enabled Beijing to meet many “Made in China 2025” goals — reducing dependence on Western tech and gaining market share — and that China could catch up in lagging areas like aerospace or advanced semiconductors within a few years at the current pace. She also criticizes the subsidy-driven model as unsustainable, producing waste, weaker economic growth and excess capacity that floods export markets and challenges European firms. Overinvestment has come at the expense of structural reforms and stronger domestic consumption.
When “Made in China” comes from Germany
Boullenois adds that cooperation can be mutually beneficial if Chinese firms produce locally in Europe. CATL’s Arnstadt plant illustrates this: only about 10% of its roughly 1,700 employees are from China. The company collaborates with local universities and chambers of commerce, runs a training center where about 20 apprentices learn trades such as mechatronics, and has attracted the Fraunhofer Institute’s Battery Innovation and Technology Center (BITC) to the site. Fraunhofer’s Roland Weidl calls the partnership a “win-win” because each partner leads in different areas and both expect benefits.
Europe can draw lessons from past technology transfers by using its large internal market to attract investment, build local value chains and encourage controlled technology exchange. The EU is considering conditions on Chinese investment in Europe, including rules on technology transfer, local value creation and employment, to balance opportunities from local production against risks of unwanted technology outflows.
This article was originally written in German.