German companies are sending a surprisingly clear signal about where they see near-term opportunity. A study from the German Economic Institute↗ found that German corporate investment in China rose by roughly one-third during the first half of 2026 while investment in the United States fell sharply.
That pattern runs against years of political language in Berlin and Brussels about reducing dependence on China. Governments worry about strategic exposure; companies still have to optimize around customers, supply chains and expected returns.
China remains a huge market for German automakers, machinery companies, chemicals and industrial suppliers. For many of them, operating locally is increasingly necessary to compete with rapidly improving Chinese rivals.
The takeaway is not that German industry has chosen China over America. It is that capital allocation can diverge from geopolitical rhetoric, and those divergences often reveal where businesses believe the real economic pressure points are.
A German Economic Institute study says German firms increased investment in China by about one-third in the first half of 2026 while investment in the U.S. dropped sharply.