An aerial drone photo taken on Nov. 14, 2025 shows vessels moored at a container terminal in Jingtang area of Tangshan Port in Tangshan City, north China's Hebei Province. [Photo/Xinhua]

German companies operating in China have grown more optimistic about their business outlook and plan to deepen cooperation with Chinese partners, an annual survey showed on Tuesday, underscoring stronger engagement in their biggest Asian market.

The German Chamber of Commerce in China (AHK China) said in its 2025/2026 business confidence survey that 93 percent of respondents intend to remain engaged in the Chinese market, reflecting greater optimism than a year ago.

About 65 percent said they are confident about China's economic development over the next five years, while most of the remainder maintained a neutral view.

Among the 627 German companies surveyed, more than half plan to increase investment in China within the next two years, particularly in metal products, automotive, electronics, chemicals and logistics, citing the need to stay competitive, advance localization and pursue joint innovation with Chinese partners.

Around two in three German companies view their Chinese peers as potential innovation leaders, a trend that is reshaping collaboration patterns, the chamber said.

According to the survey, 56 percent of firms aim to expand cooperation with Chinese peers through strategic partnerships or joint ventures, among other forms of collaboration, to leverage knowledge-sharing and drive growth. "Chinese partners become a cornerstone of German companies' strategy," said the chamber.

"Sophisticated partnerships with Chinese companies, together with a third wave of localization that focuses on R&D and its speed of industrialization, have become key response mechanisms for German companies in China to strengthen their market position and drive not only local but also global top innovations," said Martin Hofmann, chairperson of the chamber's North China chapter.

As innovation in the Chinese market accelerates, German companies are increasingly benefiting from capabilities developed there. The survey found that knowledge flows have shifted from the traditional one-way transfer, in which headquarters supplied technical and product expertise to Chinese subsidiaries, to two-way exchanges.

Forty percent of respondents said innovation and efficiency solutions now travel back from China to their German headquarters, particularly in the machinery and automotive industries.

The chamber also stressed that good relations between China and Germany -- and more broadly China and the European Union -- are vital to these companies' business success, as two-thirds said their China operations are closely tied to bilateral relations.

"German companies expect further efforts from the German government to improve the public image of China in Germany," the survey noted.