China Overtakes US as Germany’s Top Investment Source
China has overtaken the United States as Germany’s largest source of foreign investment projects for the first time since 2017, according to the annual “Foreign Investment in Germany 2025” report released by Germany Trade & Invest (GTAI) on May 21. Chinese companies initiated 228 investment projects in Germany last year, a 14.6% increase year-on-year, while US projects fell 10% to 206, marking a symbolic shift in transatlantic and Sino-European economic dynamics.
Context: A Tale of Two Trends
The milestone comes against a backdrop of a sharp overall decline in foreign investment in Germany. Total foreign investment projects fell 9.3% to 1,564 in 2025 — the largest drop since GTAI began tracking in 2016 and the fourth consecutive annual decline, as reported by Handelsblatt. However, Germany fared better than the broader European Union, where foreign investment projects declined by approximately 18%, and the global average of 9.5%.
Achim Hartig, GTAI’s Head of Investment Promotion, described the decline as significant but noted it was “only half as large as in Europe overall and slightly below the global trend.” He attributed the global investment downturn to US trade policy, telling reporters that “the global economy has reached a tipping point, also due to the economic policy of the US government.”
Chinese Investment: Quality and Diversity
Chinese investment in Germany is not only growing in volume but also in sophistication. According to the GTAI press release, Chinese projects concentrated in electronics and automation (30% of total), transport and logistics (22%), energy and raw materials (15%), and digitalization. Notably, over one-fifth (21%) of Chinese projects involved production and research-and-development activities — above the overall foreign investment average of 19%.
Thomas Bozoyan, the GTAI expert who authored the report, said Chinese companies were “continuously expanding their footprint in Germany, in particular across industrial applications, cutting-edge and future technologies, as well as knowledge-intensive services.” He added that this “not only underlines Germany’s long-term attractiveness for Chinese investors, but also reflects the accelerating international expansion and global ambitions of Chinese companies.”
Expert Perspectives on the Shift
The shift from mergers and acquisitions to greenfield investment marks a strategic evolution in Chinese companies’ approach to the German market. Yicai Global reported that Shou Shuning, a tax partner at PricewaterhouseCoopers Germany, noted that despite Germany’s mediocre economic performance, Chinese investors remain keenly interested, particularly in new energy vehicle and digital technology supply chains.
Wu Huiping, Deputy Director of the Germany Research Center at Tongji University, observed that Chinese enterprises should “shift from the previous M&A model to greenfield investment and even localized operation.” She noted that Germany welcomes Chinese expertise in intelligent manufacturing, which could help power the country’s industrial transformation.
Broader Implications
China’s rise to the top spot reflects both the aggressive internationalization strategy of Chinese companies and the relative decline of US investment amid global trade disruptions. The Xinhua News Agency highlighted that the GTAI report tracks greenfield investments and expansion projects only, excluding mergers and acquisitions — a category where Chinese investment peaked between 2015 and 2018 before EU investment screening tightened.
Switzerland ranked third with 174 projects, down 13.9%, as the overall investment landscape contracted across developed economies.
What to Watch
The contrasting trends raise important questions about the future of China-Germany economic relations. While Chinese investment surges, Germany faces structural economic challenges including rising energy costs, inflation pressures, and the impact of US tariff policies. China recently regained its position as Germany’s top trading partner in early 2026, further underscoring deepening economic interdependence despite geopolitical tensions.
As the People’s Daily noted in its coverage, the report demonstrates that Chinese companies are not just investing more — they are investing differently, with a greater emphasis on production, R&D, and long-term integration into Germany’s industrial ecosystem. Whether this trend can withstand escalating US-China trade tensions and evolving EU investment screening reforms remains an open question for policymakers and market observers alike.