German prosecutors on Wednesday said they were investigating three people who allegedly spied for China, with media reporting that a German former EU diplomat was among the suspects.

"We can confirm an investigation into suspected espionage" for Chinese state security bodies, a spokesman for the federal prosecutor's office told AFP.

Der Spiegel weekly said one of the suspects was a German diplomat who worked at the European Commission in Brussels before serving several stints as ambassador for the European Union in foreign countries.

The other two were reportedly lobbyists employed by a "well-known Germany lobby firm".

Prosecutors refused to provide details about the suspects and said no arrests have been made.

But they confirmed the information in Der Spiegel that police were on Wednesday raiding homes and offices linked to the trio in Berlin, Brussels and the German states of Bavaria and Baden-Wuerttemberg.

According to Spiegel, prosecutors accuse the former diplomat and one of the lobbyists of "sharing private and commercial information with the Chinese ministry for state security".

The third suspect apparently only indicated "a willingness to do so".

The diplomat at the centre of the probe reportedly ended his EU career in 2017 and switched to working for a lobbying firm, where he then recruited the two other suspects.

The spying is alleged to have started that same year.

If the allegations are confirmed, it would be a rare case of Chinese espionage being uncovered.

"Although there is always much talk about large-scale Chinese spying operations in Germany and Europe, investigators are rarely successful against Beijing's secret services," Spiegel wrote.

China is a crucial trading partner for Germany but concerns have mounted in recent years over a spike in Chinese investments in German firms
China is a crucial trading partner for Germany but concerns have mounted in recent years over a spike in Chinese investments in German firms AFP / John MACDOUGALL

A spokeswoman for the European Commission declined to comment directly on the Spiegel report, but told AFP that the Commission was "ready to cooperate with national authorities conducting investigations that may implicate former staff members."

The probe comes at a time of intense debate in Europe's top economy about whether or not to exclude Chinese tech giant Huawei from developing Germany's 5G mobile networks.

Critics, led by Washington, say Huawei is too close to Beijing and its equipment could be used as a tool for spying -- an allegation Huawei strongly denies.

US President Donald Trump has already ordered American firms to cease doing business with market leader Huawei, and has urged allies to follow suit.

Australia and Japan have also taken steps to bar or tightly restrict the firm's participation in their 5G networks.

Germany so far has resisted pressure to ban Huawei.

Chancellor Angela Merkel has instead said Berlin would insist on stringent security requirements without barring individual companies.

China is a crucial trading partner for Germany, but concerns have mounted in recent years over a spike in Chinese investments in German firms.

The buying spree has fuelled fears of vital German knowhow and technology being sold off to Beijing, prompting the government to tighten restrictions on foreign takeovers.

Also on Wednesday, the Sueddeutsche Zeitung newspaper reported that the Chinese embassy was allegedly planning to improve China's image in Germany using funds from the private sector.

The newspaper claimed that ambassador Wu Ken had written to major German companies in December, asking them to help finance a project to promote a "better picture" of China in the German media.