German companies increased their investment in China by €5.6 billion ($6.50 billion) compared with the same period last year, according to an analysis by the Institute of the German Economy (IW), based on data from Germany’s central bank, the Bundesbank.
The study said the level of investment was broadly in line with the average half-year investment recorded between 2020 and 2025, highlighting the continued importance of China to German businesses.
Juergen Matthes of the IW said German companies had little choice but to maintain their investments in China, describing the country as both a major market for their products and a location where they can strengthen their competitiveness.
He said government subsidies and an undervalued yuan had made production in China artificially cheaper, prompting German companies to expand their operations there as they seek to remain competitive with Chinese manufacturers in global markets.
“For Germany, this means that production and employment are increasingly moving to China,” Matthes said, urging the European Union to address the competitive disadvantage by imposing countervailing tariffs on Chinese imports.
Meanwhile, Germany’s investment in the United States fell by nearly two-thirds to about €4.3 billion during the first half of 2026.
The study attributed the decline to growing trade tensions and tariffs imposed by US President Donald Trump, which have increased uncertainty for German companies operating in or planning to invest in the US market.
Goodness Anunobi
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