Germany’s trade deficit with China widened significantly in the first half of 2026, even as China remained the country’s largest overall trading partner, according to preliminary data from state-run agency Germany Trade & Invest (GTAI) released on Sunday.
German exports to China fell more than 12% year-on-year to just under €37 billion between January and June, reducing China to the ninth-biggest market for German goods. The decline came as Chinese firms increasingly reduced their reliance on imports from Europe, reflecting a growing emphasis on domestic production and supply chains.
The shift marks a substantial change from recent years. As recently as 2021, China was Germany’s second-biggest export market. That year, German companies sold merchandise worth €104 billion to China despite the effects of the pandemic. By 2026, however, Germany was facing a markedly different trading relationship, with Chinese demand for German goods weakening while Chinese exports to Germany continued to expand.
Germany’s manufacturing sector is already under pressure from both U.S. tariffs and growing Chinese competition, contributing to major job cuts at major industrial companies such as carmaker Volkswagen. The changing trade relationship with China adds to those challenges by reducing the market available to German manufacturers while increasing competition from Chinese producers.
Germany’s imports from China rose 8.9% to €91.8 billion in the first half of 2026. As a result, Germany’s trade deficit with China increased from €40 billion during the first half of last year to approximately €55 billion over the same period this year. Total bilateral trade reached more than €128 billion, around €3 billion more than Germany’s trade with the United States.
Corinne Abele, GTAI East Asia expert, attributed the decline in German exports to China to Germany’s weak domestic economy and China’s increasing focus on domestic value chains. German companies are also producing more inside China itself, while China’s property crisis and cash-strapped regional governments are restraining investment, she said.
The weakening position of China as a destination for German exports is particularly notable given its importance to Germany’s industrial economy. Far smaller economies, including Austria and Switzerland, bought more German goods than China during the first half of 2026, according to the data.
Commerzbank economist Vincent Stamer said China’s diminishing reliance on Germany indicated that the country was becoming more independent of Western powers while continuing to catch up technologically. The development reflects a broader shift in the structure of bilateral trade, with China increasingly supplying Germany rather than relying on German industrial goods.
China overtook the United States as Germany’s top trading partner in 2025, after US President Donald Trump returned to the White House and introduced protectionist tariff policies that eroded German exports to the United States. The US nevertheless remained Germany’s single-biggest foreign market.
German exports to the US fell about 6% through June to just over €74 billion, while imports from the US increased 7.1% to nearly €51 billion, Abele said. France and the Netherlands remained the next-largest export markets.
Overall, German exports increased 3.7% to €817 billion through June, supported by continued global growth and demand. Yet the changing balance with China points to growing challenges for Germany’s traditional industrial model.
“But the ‘Made in Germany’ brand must still reinvent itself,” Stamer said.
