New Delhi, Sept. 3 -- The heart of the German economy is making and exporting the big-ticket, complex goods that make global business run: everything from cars and locomotives to factory machinery, aircraft and construction equipment.

That model for growth is under serious pressure from a new competitor whose exports can often match or approach Germany's in quality and sell for far less: China.

The China shock - as economists call it - is emerging as a key reason for Germany's chronic economic stagnation since the COVID-19 pandemic. The sluggish economy has helped make Chancellor Friedrich Merz's governing coalition unpopular ahead of an election Sunday in the eastern region of Saxony-Anhalt in which the far-right Alternative for German...