German companies in China have grown more optimistic about the country’s economic outlook, even as the Iran war and persistent trade tensions continue to weigh on their operations, according to the German Chamber of Commerce in China.

In a survey released on Tuesday, the chamber found that 37 per cent of respondents expected China’s economy to improve over the next six months. That was up 22 percentage points from last year, with only 17 per cent anticipating a deterioration – a sharp reversal from the 56 per cent who held that view in 2025.

Oliver Oehms, executive director and board member of the German Chamber of Commerce in China in North China, said a base effect had partly driven the improvements. “The results last year were rather negative, having in mind that the 2025 survey was conducted just a couple of days after the trade tension escalation,” he said.

The findings, based on a poll of 216 member companies conducted between April 15 and 21, also pointed to improved business sentiment across the board.

Respondents assessed industry conditions more positively, with 34 per cent of firms reporting improving trends in 2026, up from 19 per cent a year ago. Some 42 per cent expected turnover to rise by year-end, up from 29 per cent last year, while the share forecasting higher profits rose 11 percentage points to 29 per cent.

Investment plans also strengthened, with 61 per cent looking to expand their footprint in China over the next two years – the highest level since 2023.

The rosier outlook comes despite continued geopolitical headwinds. Three-quarters of respondents said the Iran war had affected their operations, mainly through higher logistics costs and supply prices. Meanwhile, 69 per cent reported being negatively affected by US-China trade tensions – despite Beijing and Washington’s tariffs easing since last year.