German companies' investment in China reached a four-year high from January to November 2025, according to data compiled by Reuters, as Chinese experts said rising U.S. protectionism and mounting geopolitical pressures have eroded German and European investors' confidence in the U.S. market, prompting part of the capital to shift toward China. Data from IW German Economic Institute (IW Institute) showed that Germany's investments in China climbed to over €7 billion between January and November last year, up 55.5% from the €4.5 billion in 2024 and 2023. Under pressure from the U.S., Germany and Europe are pursuing more diversified economic strategies to mitigate risks, Jian Junbo, Director of the Center for China-Europe Relations at Fudan University's Institute of International Studies, told the Global Times, noting that the increased investment in China reflected not a single shift in focus but a broader push by European companies to diversify risk.
In the first three quarters of 2025, China reclaimed its position as Germany's largest trading partner with a total value of €185.9 billion, up 0.6% year-on-year, Xinhua News Agency reported on November 19, 2025, citing data from the German Federal Statistical Office (Destatis). China had been Germany's largest trading partner from 2016 to 2023 before being briefly overtaken by the U.S. in 2024. The shift was also driven by concerns “about geopolitical conflicts” that were prompting companies to bulk up their China business so it could operate more independently in case of any major trade disruptions, Juergen Matthes, head of international economic policy at the IW institute, was cited in the Reuters' report.
German companies ranging from BASF and Volkswagen to Infineon and Mercedes-Benz remain heavily dependent on the Chinese market. “Despite widespread talk of so-called 'de-risking' and supply-chain shifts, major German companies' reliance on and commitment to the Chinese market has not weakened and is even strengthening in some areas, underscoring a clear and ongoing trend,” said Jian.China and Germany are deeply intertwined economically, as current bilateral industrial cooperation ties cannot be replaced in the short term. Rebuilding supply chains without China would be nearly impossible in terms of both time and cost, given its irreplaceable advantages in labor, energy, and industrial ecosystems, Jian further noted. Data from from the General Administration of Customs of China showed that in 2025, foreign trade between China and Germany hit USD19.89 billion, highest among EU countries, up 4.6% year-on-year.
This strong trade performance coincides with major German corporate investments in China. In November, BASF's integrated facility in Zhanjiang, Guangdong province, launched production of its first core products, marking a key milestone in the company's largest single investment to date. In August last year, Bosch's smart driving innovation project was inaugurated in Suzhou, Jiangsu province, with plans to invest around CNY10 billion over the next five years, the Global Times reports.
