German firms lift China investment as US outlays fall, IW study shows

Berlin: In the first half of 2026, German companies significantly increased their investment in China by 33%, while their investment in the United States dropped by nearly two-thirds, according to a study from the German Economic Institute (IW), revealed to Reuters on Sunday.

German firms allocated €5.6 billion ($6.5 billion) more to China than in the same period last year, as per IW's evaluation of data from the Bundesbank. This investment level matched the typical half-year investment average from 2020 to 2025.

IW's Juergen Matthes expressed that German businesses had no alternative but to persist in investing in China, considering it an essential sales market and a "gym" where companies can enhance their competitive edge. Matthes attributed the Chinese investment to state subsidies and an undervalued yuan, which made production in China artificially inexpensive, motivating German companies to expand within the country to compete with Chinese rivals worldwide.

Matthes added, "For Germany, this translates to production and jobs moving to China." He further suggested that the European Union should address this unfair practice by imposing countervailing tariffs on Chinese imports.

Meanwhile, investment in the United States diminished by nearly two-thirds to approximately €4.3 billion, as outlined in the study. This decline was primarily attributed to trade tensions and US tariffs imposed by then-President Donald Trump.