German firms boost China spending while sharply cutting US investments in H1 2026
German companies increased their investment in China by about a third in the first half of 2026, while investment in the United States fell by nearly two-thirds.
An analysis by the German Economic Institute, using Bundesbank figures, indicates that German companies raised their China investment by roughly one-third in the first half of 2026, adding €5.6 billion versus the previous year and aligning with the 2020-2025 average. Matthes described China as both a vital sales market and a “gym” for building competitive strength, noting that state subsidies and an undervalued yuan keep production costs artificially low.
He warned that this shift moves production and jobs to China and called for EU counter-measures such as tariffs on Chinese imports. Conversely, German investment in the United States fell by almost two-thirds to about €4.3 billion, a drop the study attributes to ongoing trade tensions and tariffs introduced under Donald Trump. The contrasting trends highlight a reorientation of German overseas capital toward Asia and away from North America.
Why it matters
The shift signals a realignment of German overseas capital, affecting jobs, trade balances and EU policy toward China.
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