Trend Analysis: Germany’s Trade Deficit with China May Exceed €100 Billion
According to a report by the German weekly *Stern*, trade relations between Germany and China are facing mounting pressure. Particularly in three key industrial sectors, Germany’s competitive position is increasingly being challenged. A new study indicates that the scope and severity of this crisis are expanding.
Germany’s trade relationship with China is approaching a new historical low. The trade deficit with China could surpass €100 billion for the first time this year, according to an analysis by the German Institute for Economic Research (IW). This would represent more than a sevenfold increase compared to 2019.
These figures reflect more than just imbalances between imports and exports. China is emerging as a steadily stronger competitor within Germany’s traditional economic pillars—sectors including automotive, electrical engineering, and mechanical engineering, which have underpinned Germany’s economic success over recent decades.
German imports from China continue to rise, while exports are declining. In the first half of 2026, the value of goods imported from China was nearly 2.5 times higher than Germany’s exports to China. In 2019, imports from China were only about 15% higher than exports.
If the trend observed in the first half of 2026 persists through the second half, Germany’s trade deficit with China could grow from €14.1 billion in 2019 to approximately €105 billion. Already in 2025, the deficit reached around €90 billion—an all-time high.
Notably, German imports and exports are moving in opposite directions. The IW forecasts that, compared to 2019, Germany’s merchandise exports to China may decline by roughly one-quarter, while imports from China are expected to increase by 62%. This shift suggests that what once represented a profitable trading relationship for German firms is now posing growing challenges for an increasing number of domestic enterprises.
A deeper look into individual industrial sectors reveals particularly acute impacts on Germany’s three core industries.
Automotive Industry: In 2019, Germany’s exports of vehicles and auto parts to China exceeded its imports of similar products by over €23 billion. The IW projects that by 2026, this surplus will shrink to just around €1 billion. Compared to 2019, Germany’s vehicle exports to China are expected to fall by 54%, while imports of vehicles and components from China could rise by more than 475%.
Electrical Engineering: The trade deficit in electrical equipment has potentially grown to over €24 billion since 2019—more than five times the previous level. Meanwhile, the deficit in computers, electronics, and optical products is projected to approach €38 billion. Together, these two categories account for roughly one-third of the deterioration in Germany’s overall trade balance with China.
Mechanical Engineering: One of Germany’s traditional strengths, mechanical engineering is also under strain. In 2019, Germany enjoyed a trade surplus of nearly €10 billion in this sector; by 2026, it may record a deficit exceeding €1 billion for the first time. Germany’s exports of machinery to China are expected to drop by 26%, while imports are forecast to rise by 65%.
The above projections are based on trade data from the first half of 2026. The IW notes that these calculations do not isolate changes in trade volumes, and price fluctuations may influence final outcomes.
Of particular note, the IW assesses that high energy costs in Germany are not the primary driver of the imbalance. Energy-intensive sectors such as chemicals, paper, glass, and metals contributed only about €4 billion to the worsening trade balance since 2019. By contrast, the bulk of the deterioration stems from industries where competitiveness is less tied to energy prices. The IW attributes the main cause to factors such as technological advancement in China.
The IW has called for government intervention. Jürgen Matthes, the institute’s expert on foreign trade, therefore urges that Germany must pursue not only domestic reforms but also additional measures at the European level.
The data suggest that Germany’s trade challenges with China are no longer limited to competition with a low-cost production base—but rather stem from a rising technological power with continuously improving industrial competitiveness.
Source: rfi
Original article: toutiao.com/article/1879160267783172/
Disclaimer: The views expressed in this article are those of the author alone.