German Investment in China Rises as US Outlays Decline

German companies significantly increased their investments in China during the first half of this year, according to a study by the Institute of the German Economy (IW) based on Bundesbank data. The investment amount rose by approximately 5.6 billion euros, which is about one third higher than the same period last year. This figure aligns with the long term average for half year values between 2020 and 2025. Many of these expansions are being funded through profits generated locally within China.

In contrast, German investment in the United States decreased by nearly two thirds to approximately 4.3 billion euros during the first half of the year. IW expert Jürgen Matthes noted that China remains a critical sales market and serves as a fitness center where firms can improve their competitiveness against local rivals to better compete globally.

Matthes also attributed the investment trends to the Yuan exchange rate and state subsidies, which he claims artificially lower production costs in China. He warned that this leads to the migration of production and jobs from Germany to China, suggesting that the EU should implement countervailing duties on Chinese imports to address these distortions.