German firms lift China investment as US outlays fall, IW study shows
- 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 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.
China is increasingly regarded as a difficult partner. Nevertheless, German companies seem to have expanded their investments there again. However, the situation in the USA is quite different.
German companies are again investing more in China. In the first half of the year, 5.6 billion euros were spent – despite growing risks and competition.
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