Data from IW and Bundesbank reflect Berlin’s balancing act between a tougher China stance and maintaining close trade ties.

German firms invested over 7 billion euros in China in 2025—achieving a four-year high and marking a 55.5% rise from previous years as ties deepen despite trade tensions.

The surge is driven by a mix of concerns about American protectionist policies, EU tariff effects, and geopolitical risk prompting German companies to diversify with more China-focused operations.

Industry players highlighted include BASF, Volkswagen, Infineon, Mercedes-Benz, and ebm-papst, with ebm-papst alone investing 30 million euros in China and planning expansion in the U.S. too.

The report prepared for Reuters notes that the information is part of an ongoing update and analysis rather than a final figure.

Analysts frame this as part of a broader trend of China-focused activity, indicating the findings will continue to evolve over time.

Experts from Fudan University and IW Institute emphasize ongoing de-risking and diversification, stressing long-term stability and constructive collaboration over zero-sum competition.

The analysis relies on Bundesbank data, contributing to wider observations about European responses to the evolving US-China trade environment.

Juergen Matthes and other experts stress developing local Chinese supply chains as a central part of the strategy.

IW calculations indicate 2025 represents the highest investment value in years since 2021 when viewed through their metrics.

Germany’s leaders call for new alliances amid fragility in established relations, signaling strategic recalibration in light of geopolitics.

Bundesbank data for 2025 (January–November) point to greater localization of German manufacturing and R&D in China, with implications for exports and domestic jobs.