German Firms Lift China Investment by One-Third as US Outlays Fall

German companies increased investment in China by roughly one-third in the first half of 2026, while direct investment in the United States fell by nearly two-thirds to about €4.3 billion, according to a German Economic Institute study based on Bundesbank data. The shift reflects heightened trade tensions, tariffs and policy uncertainty under current President Donald Trump, which have weakened confidence in the U.S. market. German firms continue to view China as both a critical sales market and a production base where competition can strengthen their global capabilities. State subsidies and a relatively weak renminbi have also lowered production costs in China, encouraging further expansion despite Germany’s efforts to reduce dependence on the country. The trend has raised concerns that production and jobs could move from Europe to China, prompting calls for the European Union to consider countervailing tariffs and other measures.