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

Business Recorder, citing a study by the German Economic Institute (IW) that Reuters viewed on Sunday, reported that German firms raised their investment in China by roughly a third in the first half of 2026. The rise came to €5.6 billion ($6.50 billion) against the same period a year earlier, drawing on Bundesbank figures analysed by IW. That amount matched the average half-year level recorded between 2020 and 2025, while investment in the United States fell by nearly two-thirds to about €4.3 billion.

IW economist Juergen Matthes argued that German businesses have few options but to keep investing in China, which he described as both a major sales market and a 'gym' for building competitive strength. He said subsidies from the state and an undervalued yuan make production in China cheaper, pushing German firms to grow local operations so they can face Chinese competitors worldwide.

Matthes also warned that production and jobs are moving from Germany to China, and he urged the EU to introduce countervailing duties on Chinese goods to end what he called an unfair contest. The study linked the drop in US investment to trade tensions and the tariffs President Donald Trump has imposed.