Foreign Investment in Germany Declines as China Overtakes the U.S.

According to a new report by consulting firm EY, the number of foreign investment projects in Germany in 2024 reached 608, marking a 17 percent decline compared to the previous year and the lowest level since 2011. These projects include the establishment of new sites and job opportunities but exclude financial transactions or company acquisitions.

Among investing countries, the United States saw the largest retreat. The number of investment projects by American companies in Germany dropped 27 percent to 90 projects, while the overall decline across Europe was only 11 percent. As a result, Germany experienced the steepest drop in attracting U.S. investment among the main European destinations.

Meanwhile, China, with 96 new projects—a slight 3 percent decrease—has become Germany’s largest foreign investor for the first time. The report notes that Germany remains the most popular destination for Chinese investors in Europe.

EY’s study shows that foreign investment projects in Germany have nearly halved since 2017, suffering a 46 percent decline. In comparison, France and the UK, despite decreases, still maintain a stronger position in attracting foreign capital.

Henrik Ahlers, CEO of EY Germany, warned that Germany is losing its status as a prime investment destination. He cited high energy and labor costs, heavy taxation, complex bureaucracy, and lagging digitalization as key factors deterring foreign investors.

Source: DPA, Handelsblatt, Spiegel