Inside a more-than-100-meter production hall in Arnstadt, hundreds of robots hum while lights blink and warning signals chirp. Only about a dozen people work the floor; automated systems handle the heavy lifting. Journalists are seldom allowed in, and when they are cameras must be covered and audio recordings approved. The plant belongs to CATL, China’s leading electric-vehicle battery maker, and produces about 14 gigawatt-hours of battery capacity a year—enough for roughly 200,000 electric cars—supplying European automakers. Building batteries in Germany shortens transport for heavy, flammable cells, lowers the risk of punitive trade measures and highlights shifting ties among China, Germany and the EU.
For decades Germany’s manufacturing model helped propel China’s industrial climb. Volkswagen’s 1980s joint venture in Shanghai set an early example, and Germany’s Industry 4.0 push—digitally networked production—offered another template. Chinese firms eager to move beyond a low-cost reputation adopted these methods. In 2014 the two countries signed cooperation agreements, and in 2015 Beijing launched “Made in China 2025” to modernize industry and secure leadership in key sectors.
The results have been dramatic. Chinese machinery exports to the EU rose from about €20 billion in 2018 to €40 billion in 2024 and could reach €50 billion this year, observes Oliver Wack of the German Engineering Federation (VDMA), even while Germany remains a major exporter to China. In green technologies the shift is striking: China’s solar and wind capacity now exceeds that of all other countries combined; it controls roughly 70% of the global drone market and is rapidly expanding in electric vehicles.
Beijing did not rely on passive imitation alone. After announcing “Made in China 2025,” authorities introduced measures that helped domestic firms acquire advanced technologies and, in some cases, whole companies in Europe. The 2016 takeover of German robotics firm Kuka by China’s Midea Group became a potent symbol of those concerns and stirred debate about the speed and scope of China’s technological advance.
Skeptics initially argued China would need years to master certain processes; Clas Neumann, then a vice president at SAP, estimated in 2016 a 20–30 year timeline for some competencies. China accelerated that learning curve by massively expanding research investment: R&D spending rose from 1.37% of GDP in 2007 to 2.56% in 2022, funded largely by corporate profits and government subsidies. State support quadrupled between 2014 and 2024 and now nearly matches U.S. research subsidies, analysts say.
That subsidy push helped Beijing meet many “Made in China 2025” goals—cutting dependence on Western technologies and gaining market share. Camille Boullenois of the Rhodium Group argues subsidies made rapid progress possible and could allow China to close gaps in areas such as aerospace or advanced semiconductors within a few years at current rates. She also warns the subsidy-driven model carries risks: overinvestment, wasted capacity, weaker longer-term growth and flooding of export markets that pressures European firms; progress has often come at the cost of structural reforms and stronger domestic consumption.
Still, not all outcomes are zero-sum. When Chinese firms produce locally in Europe, cooperation can bring mutual benefits. CATL’s Arnstadt site employs roughly 1,700 people, only about 10% of whom are from China. The company partners with local universities and chambers of commerce, runs a training center where about 20 apprentices learn mechatronics and related trades, and has attracted the Fraunhofer Institute’s Battery Innovation and Technology Center (BITC) to the location. Fraunhofer’s Roland Weidl calls the partnership a “win-win,” with each side contributing strengths and expecting reciprocal gains.
European policymakers are taking those mixed lessons to heart. The EU is considering rules on Chinese investment that would impose conditions on technology transfer, require local value creation and protect employment, aiming to capture benefits from local production while limiting unwanted outflows of know-how. More broadly, Europe hopes to use its large internal market to attract investment, strengthen regional supply chains and shape controlled technology exchange rather than cede strategic sectors.
The CATL plant in Thuringia encapsulates the dilemma: it brings jobs, skills and supply security to Europe, yet its presence is also a reminder of how quickly global industrial power can shift when technology, capital and policy align. Policymakers and industry leaders must weigh immediate economic gains against long-term strategic risks while crafting rules that balance openness with safeguards. Originally published in German.