Chinese experts said the key lies in effective bilateral dialogues on policy stability, technical cooperation and compliance. These efforts could potentially turn short-term capacity collaboration into long-term technological and market win-win outcomes.

　　Despite a welcoming signal, many Chinese firms are cautious about investing, with issues such as policy uncertainty, EU"s anti-subsidy probes, and groundless smears against State-owned enterprises from China, Zheng said.

　　"While the stance is welcoming, on the operational level, specific demands for high local content and technology transfer raise costs and risks; if too onerous, Chinese firms may prefer lower-risk trade over asset-heavy investment," Zheng said.

　　Luke Hu, co-founder of Electroder, an industry insider familiar with the Chinese and German auto industries, told the Global Times Thursday that even with policy and corporate backing, short-term challenges for a Chinese carmaker looking to produce at a Germany plant include capacity adjustments, workforce training, supply chain overhauls, and cultural alignment.

　　In the long run, German automakers must address structural issues by strengthening their own competitiveness, particularly in electrification and smart technologies. But most importantly, industry insiders tend to agree that betting on protectionism is the worst option, Hu said.

　　"Many industry observers believe that fair competition and cooperation - both in Germany and China - can help shed outdated practices that persisted in the German automotive industrial system and erode its global competitiveness. Therefore, such cooperation, despite the hurdles to be faced, may as well blaze a way out for Germany"s industrial upgrading from the current conundrum."