Germany's trade deficit with China set to hit record as automotive surplus collapses

[Beijingwalker]

Germany's trade deficit with China set to hit record as automotive surplus collapses​

Deficit projected to exceed $112B, more than seven times its 2019 level, German Economic Institute says

Mucahithan Avcioglu
15 October 2026

Germany's trade deficit with China is expected to exceed €100 billion ($112 billion) for the first time this year, driven by widening imbalances in key industrial sectors, the German Economic Institute (IW) said Thursday.

The deficit would be more than seven times its 2019 level of €14.1 billion if trade trends from the first half of 2026 continue through the rest of the year, the institute said.

Germany imported almost 2.5 times as much from China as it exported to the country in the first six months. The projected annual deficit would surpass the previous record of about €90 billion in 2025.

German goods exports to China are projected to be roughly 25% below their 2019 level, while imports from China are expected to be about 62% higher.

Core industrial sectors under pressure​

The automotive industry accounts for almost 24% of the projected increase in the deficit since 2019, making it the largest individual contributor.

Germany's automotive trade surplus with China is expected to shrink from more than €23 billion in 2019 to about €1 billion this year. Automotive exports to China are projected to fall 54% over that period, while imports of Chinese vehicles and parts are expected to rise more than 475%.

The trade deficit in electrical equipment is forecast to exceed €24 billion, compared with €4.8 billion in 2019.

Machinery manufacturing is also expected to record its first trade deficit with China, at slightly more than €1 billion, reversing a surplus of nearly €10 billion in 2019.

Energy-intensive industries, including chemicals, paper, glass and metals, account for only around €4 billion of the widening gap, IW said, arguing that higher energy costs explain only a small part of the deterioration.

The institute attributed the shift to China's technological advances and what it described as competitive distortions, including substantial subsidies and a sharply undervalued currency.

IW foreign trade expert Jurgen Matthes called for domestic reforms and broad countervailing tariffs that could be implemented quickly.

He urged the European Council to ask the European Commission to develop a new trade instrument, arguing that such measures would restore fair competition.