IW Study: German Companies Invest More in China While US Outlays Drop

German companies raised their investments in China while cutting back on expenditures in the United States during the first half of 2026, according to an IW study.

German companies raised their investment in China by €5.6 billion ($6.50 billion) compared to the same period last year, as reported in an analysis by the Institute of the German Economy (IW), utilizing data from Germany’s central bank, the Bundesbank.

The study indicated that the level of investment was generally consistent with the average half-year investment noted between 2020 and 2025, demonstrating the continuing importance of China to German enterprises.

Juergen Matthes from the IW stated that German companies have limited options but to continue their investments in China, highlighting the nation as a significant market for their products and a place where they can enhance their competitiveness.

He stated that government subsidies and a devalued yuan have rendered production in China artificially less expensive, leading German companies to broaden their operations there to stay competitive with Chinese manufacturers in global markets.


“For Germany, this indicatethe situationat production and employment are progressively shifting to China,” Matthes stated, calling on the European Union to tackle the competitive disadvantage by implementing countervailing tariffs on Chinese imports.

Meanwhile, Germany’s investment in the United States decreased significantly to approximately €4.3 billion during the first half of 2026, representing a decline of nearly two-thirds.

The study linked the decline to escalating trade tensions and tariffs implemented by US President Donald Trump, which have heightened uncertainty for German companies engaged in or considering investments in the US market.