German investment in China soars as companies localize further: Financial Times

German direct investment in China has been surging, with the total in the first half of the year already surpassing that of the entire previous year, the Financial Times reported recently.

This highlights German companies' confidence and optimism regarding the Chinese market's positive prospects.

In the second quarter of this year, foreign direct investment from Germany into China reached 4.8 billion euros (5.3 billion U.S. dollars), nearly double the amount recorded in the first three months, bringing the total for the first half to 7.3 billion euros. For comparison, the total investment stood at 6.5 billion euros in 2023, as reported by the Financial Times, citing data from Germany's central bank.

The investment surge underscores a sign "that companies in Europe's largest economy are ignoring pleas from their government to diversify into other, less geopolitically risky markets," as noted by the British media.

The report added that much of the investment was driven by major German carmakers, which are increasingly adopting an "In China, for China" strategy. This approach involves shifting more production to China, one of their crucial markets to mitigate supply chain risks, which became particularly apparent during the pandemic and the blockade of the Suez Canal.

The report said major German carmakers like Volkswagen and BMW have each announced further investments of 2.5 billion euros in China in recent months, with a focus on production and innovation.

Danielle Goh, an analyst at the U.S.-based research group Rhodium Group, predicts that the strong momentum of German investment in China would continue throughout the rest of the year, according to the report.