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A breathtaking panoramic view of Beijing's urban skyline at dusk with vibrant city lights and a colorful sky.
German firms increase China investment as US spending declines
BERLIN — September 13, 2026
German companies increased their investment in China by about one-third in the first half of 2026, while sharply cutting investment in the United States, according to a study based on German central bank data.
The German Economic Institute (IW) said German firms invested about €5.6 billion more in China than during the same period a year earlier. The investment level was broadly in line with the average recorded for a six-month period between 2020 and 2025.
China remains an important market for German companies, particularly as local production can help them compete with Chinese businesses both inside China and in other markets. IW economist Juergen Matthes said companies face strong pressure to maintain their presence in the country.
Matthes also argued that government subsidies in China and what he described as an undervalued yuan have made production there less expensive than it would otherwise be. He said these conditions were encouraging German companies to expand manufacturing in China in order to remain competitive internationally.
The shift has raised concerns in Germany about the effect on domestic production and employment. Matthes said more manufacturing and jobs could move to China and called on the European Union to respond to what he considers unfair competition by introducing countervailing tariffs on Chinese imports.
At the same time, German investment in the United States fell by almost two-thirds during the first half of 2026, reaching about €4.3 billion. The decline came as companies faced continuing trade tensions and tariffs imposed by U.S. President Donald Trump.
The contrasting investment figures highlight different pressures facing German businesses in two of their most important overseas markets. While companies continue to invest in China despite concerns over competition and industrial policy, uncertainty around U.S. trade measures has affected investment decisions.
The figures were based on an analysis of Bundesbank data by the IW. They show a significant change in the direction of German corporate investment during the first half of the year, although the study does not establish that tariffs alone caused the shift.
