German firms lift China investment as US outlays fall, IW study shows
German companies added €5.6 billion in China investment while U.S. outlays dropped nearly two-thirds, as tariffs and trade tensions reshaped strategy.
- German Economic Institute data shows German firms increased investment in China by a third during January-June 2026, adding $6.50 billion more than the previous year, while simultaneously cutting investment in the United States.
- Investment in the United States fell by nearly two-thirds to around €4.3 billion, as companies navigated trade tensions and tariffs imposed by President Donald Trump, contrasting with expanded Chinese operations.
- German Economic Institute economist Juergen Matthes noted German firms have "little choice" but to invest in China, describing the country as a "gym" where companies build competitive muscle against fierce local rivals.
- State subsidies and an undervalued yuan make local production in China artificially cheap, incentivizing German firms to expand operations as "production and jobs are shifting to China," Matthes said.
- Urging the European Union to "put a stop to this unfair game" by imposing countervailing tariffs on Chinese imports, Matthes highlighted economists' growing concerns regarding production and job shifts away from Europe.
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GERMAN investment in China has risen to 5.6 billion euros as companies move production to remain competitive in the global market.
German companies have significantly increased their investments in China in the first six months of 2026, despite the European Union's policy of limiting dependence on Beijing. The data shows how difficult it is for German industry to balance strategic "risk reduction" with the need to remain competitive in the largest Asian market. According to an analysis by the German IW Economic Institute, based on Bundesbank data, German companies invested …
German firms boost China investment as US outlays plunge amid tariff tensions
German companies increased investment in China by a third in the first half of 2026, while investment in the US fell by nearly two-thirds, a German Economic Institute study based on Bundesbank data shows.
German firms lift China investment as US outlays fall, IW study shows
German companies increased investment in China by a third in the first half of 2026 while sharply reducing investment in the United States, according to a study by the German Economic Institute (IW) seen by Reuters on Sunday.
Whether as a test for the world market or as an alternative: companies from Germany are more involved in China in the first half of the year than a year before. On the other hand, companies are exercising restraint in another market.
In the first half of the year, EUR 5.6 billion of direct investment went to China. Companies in this country remain "cautiously a choice than to serve the important sales market," says one expert.
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