China's industrial rise hits German manufacturers hard, ECB finds

FRANKFURT, Sept 22 (Reuters) - The industrial transformation of China is squeezing European firms out of global markets, particularly in machinery and transport equipment, with German companies taking some of the biggest hits, the European Central Bank said on Tuesday.

China has been expanding its global presence in recent years, focusing much of its effort on higher-value and technology production, taking on some of the best-established markets of export-reliant European companies.

"The EU's share in global goods exports has declined, particularly in sectors and destinations where China has strengthened its global presence, notably machinery and transport equipment," the ECB said in an Economic Bulletin article.

Among the EU's biggest nations, Germany has the greatest export similarity with China while Italy has the smallest, the paper found. However, smaller countries, like Ireland or Greece, were among the least exposed.

"This points to intensifying competition in sectors that have been key drivers of growth in some European economies over past decades, including automotive production and industrial machinery," the ECB added.

On top of crowding out European firms from third-country markets, China is also importing fewer products from Europe as its domestic production kicks in.

"The fall is most pronounced in economies integrated into European manufacturing and automotive value chains, including Germany and several central European economies," the ECB added.

(Reporting by Balazs Koranyi; Editing by Emelia Sithole-Matarise)