German car lobby says Chinese investment welcome

"If we want to manufacture in China, then it's of course good if Chinese companies want to manufacture in Germany," said Hildegard Mueller, head of the Association of the Automotive Industry (VDA).

Open markets "work both ways", Mueller said at the VDA's annual conference, following a difficult year for the auto sector.

German manufacturers have come under pressure from high production costs at home and rising competition from China.

And while the traditional European powerhouses have struggled with the switch to electric vehicles, Chinese manufacturers have raced ahead in the area of battery-powered cars.

The success of Chinese carmakers in the growing market has also been linked by European officials to unfair subsidies dished out by the government in Beijing.

In response, the European Commission has imposed additional tariffs of up to 35 percent on imported Chinese electric vehicles.

The German government was one of just five member states to oppose the measures, fearing retaliation against its own manufacturers.

Some Chinese car companies, such as BYD, have meanwhile advanced plans to produce in the bloc, a move that would avoid or lessen the impact of EU tariffs.

Ola Kallenius, CEO of Mercedes-Benz and head of the European auto industry body ACEA, said earlier in January that a tariff conflict would be "significantly economically harmful".

"The more free and open the markets are, the better for the European auto industry," Kallenius said, pointing to trade with China and the United States.

Donald Trump's return to the White House has opened up the possibility of a tariff conflict with the United States, with the president threatening higher import taxes on key trading partners.

Asked about Trump, Mueller said Tuesday that she was "hopeful of further discussion on this point", adding that the EU needed to improve its competitiveness to gain leverage.

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