German industry wants tougher trade action on Beijing. So why are investments in China up?
Companies are caught between China’s growing competitive threat and its importance as a market, manufacturer and source of growth
German companies have little choice but to keep investing in China if they want to remain globally competitive, according to a new study by the German Economic Institute (IW) published amid growing calls for Brussels to take a harder line on Chinese trade practices.
German firms invested an additional €5.6 billion (US$6.46 billion) in China in the first half of 2026, up about one-third from the same period a year earlier, according to the IW study published on Monday, which cited German central bank data. The figure was broadly in line with the average for the first half of each year between 2020 and 2025, pointing to relatively steady investment over the longer term.
It contrasts with a marked decline in German firms’ investment in the United States, which fell 65 per cent year on year to about €4.3 billion in the first half of this year, according to a separate IW analysis published last month.
Juergen Matthes, the author of the study released on Monday, said that to keep pace with the “fierce global price competition” of Chinese firms, German companies needed to expand production in China and “take advantage of the competitive distortions there”.