Germany’s trade deficit with China is ballooning at an accelerating pace. According to provisional data released on the 9th by Germany Trade & Invest (GTAI), a government agency, the deficit for the first half of 2026 (January to June) reached approximately €55 billion (roughly $58.3 billion), a significant increase from €40 billion in the same period last year. The declining reliance of Chinese companies on European products has become starkly evident, with China’s ranking as an export destination for Germany plunging from second place in 2021 to ninth.
China remains Germany’s largest trading partner overall, with total bilateral trade exceeding €128 billion, surpassing trade with the second-placed United States by about €3 billion. However, the composition of this trade has shifted dramatically. German exports to China fell by more than 12% year-on-year to just under €37 billion, while imports from China rose 8.9% to €91.8 billion. This asymmetric flow directly fuels the widening trade deficit.
Corinne Abele, GTAI’s East Asia expert, analyzes the export decline as stemming from “the sluggish Chinese domestic economy and a strengthening emphasis on domestic value chains.” Beyond German companies expanding local production within China, the country’s real estate slump and investment curbs by financially strained local governments are also cooling export demand from Germany.
The struggles of the automotive industry are emblematic of this shift. Caught between protectionist U.S. tariff policies and intensifying competition from Chinese manufacturers, pillars of German industry like Volkswagen are undergoing large-scale job cuts.
Vincent Stamer, an economist at Commerzbank, points out that China’s decreasing dependence on Germany is “a manifestation of its decoupling from reliance on Western nations and its progress in technological catch-up.” He further warned that “the ‘Made in Germany’ brand must still reinvent itself.”
Based on first-half 2026 data, significantly smaller economies than China, such as Austria and Switzerland, now purchase more German goods. As recently as 2021, China was Germany’s second-largest export market, importing €104 billion worth of German products even under the impact of the COVID-19 pandemic.
Meanwhile, following the return of U.S. President Trump in 2025 and the introduction of protectionist tariff policies, German exports to the U.S. declined. This allowed China to overtake the U.S. that year to become Germany’s largest trading partner. However, the reality is that this status is underpinned not by German exports, but by a surge in imports from China.
The United States remains Germany’s largest single export market, but exports to the U.S. fell by about 6% in the first half of 2026 to just over €74 billion. In contrast, imports from the U.S. expanded by 7.1% to approximately €51 billion. France and the Netherlands followed the U.S. as top export destinations. Supported by global economic growth, Germany’s total exports remained robust overall, rising 3.7% year-on-year to €817 billion.