Valuing China's "fitness center" and "stepping on the brakes" on US investment, report: German companies' investment in China increased by one-third in the first half of the year
According to the German newspaper "Handelsblatt" on the 13th, the German Institute for Economic Research (IW) released a report stating that German companies' investment in China increased by one-third in the first half of this year. During the same period, German companies' investment in the United States decreased by nearly two-thirds.
IW calculated based on data analysis from the German central bank that German companies added approximately 5.6 billion euros in direct investment in China in the first half of this year, which is about one-third higher than the same period last year. According to an analysis by the Business Daily, German companies are increasingly using local profits to fund investments.
According to German media reports, BASF, the German chemical giant, invested approximately 8.7 billion euros in the world's largest overseas project in Zhanjiang, Guangdong, China, which was officially launched in March of this year. German chemical company Covestro also announced in June this year the construction of a new large-scale MDI production facility in Shanghai, with an annual production capacity of approximately 660000 tons. Covestro executives stated that there is greater market demand and growth potential in Asia, especially in China. In addition, companies such as Bosch, Bosch, and BMW have also announced new investments or expanded their production and research and development investments in China.
German companies have no choice but to continue investing in China, "said IW expert J ü rgen Mates." China is an important market, and some companies use it as a 'gym'. "Mates believes that the logic behind this is that those who can win in fierce local competition also have a better chance of winning in the global market.
The report states that German companies continue to maintain high levels of investment in China, which is also related to the RMB exchange rate factor. Matthias saw the advantages of the Chinese market, but prescribed a "ridiculous" prescription for Europe and America. He claimed, "The production costs within China are artificially lowered. For Germany, this means that production positions continue to shift to China. The EU should stop this unfair competition pattern and impose tariffs on Chinese imported goods
The report states that German companies are "putting the brakes" on their investments in the United States. In the first half of this year, its investment decreased by nearly two-thirds year-on-year, to about 4.3 billion euros. According to German media analysis, US President Trump's economic policies have "offended" many important trading partners, especially by imposing high tariffs on multiple countries including the European Union and Germany.
Deutsche Presse-Agentur reported in April this year that the DIHK survey report on the business situation of 1700 German industrial enterprises showed that German industrial enterprises were increasing overseas investment. The target areas for Germany's outward investment have also undergone significant changes. The attractiveness of North America has significantly decreased, with the proportion of companies planning to invest in North America dropping from 48% to 44%. Meanwhile, investment in Asia is heating up again. In China, the investment share of industrial enterprises has increased from 31% to 34%. According to the report analysis, German companies seem to place greater emphasis on the Chinese market and "localized production". The proportion of German companies operating in China planning to invest in Asia has also jumped from 14% to 32%.
However, IW's report also shows that German companies' investment in China is showing a trend of differentiation: some companies have withdrawn some businesses due to increased competition pressure and other reasons. Meanwhile, from 2017 to 2024, German companies continue to invest an average of approximately 2 billion euros annually in new equity investments in China.
Faced with strong competition from Chinese enterprises, some people in the German industry have slipped down a "crooked path". At the beginning of September, Deutsche Presse-Agentur quoted the German Chamber of Commerce and Industry as saying that 66% of German enterprises interviewed felt the increasingly fierce market competition from China, and some enterprises encouraged the European Union to introduce stricter trade policies towards China. In response, the Business Daily commented that the increasingly tough attitude of German economic lobbying groups marks a turning point - in the past, due to concerns about China's countermeasures, Germany has long avoided setting up trade barriers. According to the Business Daily, the German federal government is now planning to draft proposals to "address the issue of trade imbalances," and Germany's position will largely affect the attitude of the entire European Union.
On the 13th, Zhou Wei, a researcher at the Research Institute of the Ministry of Commerce, told Global Times reporters that IW's report and expert opinions reflect the contradictory mentality of German society: companies can gain competitiveness and development dividends from cooperation with China, but local manufacturing industries have concerns about the impact of competition, and domestic trade protectionism demands have also risen. Zhou Wei stated that China has always welcomed enterprises from various countries, including Germany, to invest in China. But it is difficult for Germany or the EU to achieve practical results by relying on protectionist measures to pressure and resolve differences, rather than engaging in communication and negotiation. Both China and Europe should open up the trade and investment links, encourage enterprises to layout reasonably through positive guidance, leverage their respective comparative advantages, and form a complementary pattern in the global industrial and supply chains.