German companies increased investment in China by a third in the first half of 2026 while reducing investment in the United States by 65%, according to German Economic Institute (IW) research based on Bundesbank data. China-bound investment was €5.6 billion higher than in the same period of 2025, roughly matching the average half-year level from 2020 to 2025. Investment in the United States fell to about €4.3 billion, nearly 80% below its 2024 level, as trade tensions and tariffs under the Trump administration weighed on new commitments. Juergen Matthes of IW said China remained both a major sales market and a training ground for competitiveness, while state subsidies and a relatively weak renminbi lowered production costs. German investment in China reached more than €7 billion in the first 11 months of 2025, and 61% of companies surveyed by the German Chamber of Commerce in China said they planned to increase investment over the next two years. An AHK Greater China report also said Chinese companies' global expansion is creating opportunities for German firms embedded in China's innovation and decision-making networks. Matthes warned that the trend could shift German production and jobs to China and urged the European Union to consider countervailing tariffs.