German Companies Reinvest in China

According to German TV station N-TV, under President Trump's administration, direct investments by German companies into the United States declined sharply. In contrast, funds from German companies flowing into China increased significantly in 2025.

In the past year, German companies have significantly increased their investments in China. According to calculations by the German Institute for Economic Research (IW) based in Cologne, the total amount of new direct investment exceeded 7 billion euros. This is the highest level since 2021, about half higher than in 2024, and higher than the long-term average of 6 billion euros per year between 2010 and 2024.

Jürgen Matthes, head of the department for international economic policy, finance, and real estate markets at IW, said: "Overall, German companies are continuing to expand their business operations in China, and the pace has accelerated again."

In contrast, during the first year of Donald Trump's second term, direct investments by German companies into the United States nearly halved. Another study by IW showed that between February and November 2025, direct investments by Germany into the US fell by 45%, dropping to about 10.2 billion euros.

IW also analyzed the sources of direct investments by German companies in China. The results showed that these funds mainly came from the reinvestment of profits from Chinese subsidiaries, rather than being repatriated to Germany. Reinvested profits in China amounted to about 12 billion euros, far exceeding the actual new investment of 7 billion euros.

Matthes said: "The huge difference indicates that several years ago, some German companies had significantly withdrawn their investments from China." However, many companies, especially large ones, still want to continue investing in China, and often yield to pressure from the Chinese side, increasingly moving entire value chains to China, as Beijing hopes to establish entire value chains within China.

Therefore, more and more companies are adopting strategies such as "Made in China, for China" or even "Made in China, for the World." "In this process, they increasingly rely on local suppliers and less import components from Germany," said the IW expert. This approach can help avoid potential tariffs and export restrictions. At the same time, product development is increasingly taking place in China, with some companies even setting up cutting-edge R&D activities locally.

Source: rfi

Original: toutiao.com/article/1855604523931652/

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