German firms put a third more money into China and cut the United States

German companies increased direct investment in China by about a third in the first half of 2026 and cut investment in the United States by 65%, the German Economic Institute (IW) said on Monday, citing Bundesbank data. Flows into China came to around €5.6 billion ($6.5 billion), a third more than in the same months of 2025.

The split is the opposite of the speech that has come out of Berlin and Brussels for three years. Ministers have talked about de-risking. Works councils have talked about China risk. The capital account for January to June says the factories and joint ventures still being funded are in China, and that the United States, under higher tariffs and a second Trump term, is the market being starved of new German money.

IW is not a ministry. It is the institute the German employers’ side uses. That is why the comparison landed. A one-half-year print can swing. A 65% drop in U.S. investment is large enough that a revision would have to be enormous to erase it. The China increase is smaller in percentage terms and still the direction of travel: more, not less.

What the numbers do not settle

Stock is not flow. German firms already have a large installed base in China in cars, chemicals and machinery. Adding €5.6 billion in six months is maintenance and expansion of that base, not a new bet from zero. The U.S. figure is the sharper political fact in Washington, where German carmakers and chemical companies have been told to invest on American soil if they want to sell there.

Energy prices inside Germany, the Iran war’s effect on freight, and the AI-related scramble for components all sit behind plant decisions. IW did not allocate the shift among those causes in the first summary carried by Xinhua and German wires. Readers can hold two statements at once: official Europe wants less dependence on China, and German balance sheets spent the first half of 2026 doing the reverse with new money.