In 2025, Germany recorded its largest-ever trade deficit with China, amounting to approximately 90 billion euros. That represents a one-third increase over the previous year, underscoring the growing challenges for the German economy in its dealings with Beijing. According to analyses by the German Economic Institute (IW) in Cologne, imports from China exceeded exports to the country by more than twofold for the first time — an alarming signal for Europe's export powerhouse.
Germany's total trade turnover with China reached 251.8 billion euros in 2025, making China Berlin's most important trading partner, surpassing even the United States. Exports to China, however, fell by nearly 10% compared with 2024, while imports from the country rose by roughly 9% after stagnating the year before. The trade deficit thus hit a record 90 billion euros, an increase of approximately 30 billion euros year on year.
Historically, China was Germany's second most important export market in 2021, but by 2024 it had slipped to fifth place, and in 2025 to sixth — behind Italy. From Germany's perspective, the decline in exports to China has been uninterrupted since 2022, while imports remain at a very high level, albeit below their 2022 peak. China's global trade deficit stood at $1.2 trillion, further highlighting the scale of the problem — Germany "got the full dose" of that deficit, as Jurgen Matthes of IW put it.
Analysts point to unfair Chinese trade practices as the root cause. Jurgen Matthes stresses: "Behind this lie unfair methods. The key factors are a significantly undervalued Chinese currency relative to the euro and the world's highest government subsidies for the Chinese economy. These elements artificially depress the prices of Chinese goods on global markets, including in Germany, creating distorted competition."
Matthes adds that the deficit is not solely the result of Germany's own competitiveness problems, such as high energy costs or bureaucracy, since Berlin maintains trade surpluses with most other partners. German exports to China are falling even though Germany's overall trade surplus remains positive.
IW experts emphasize that cost-reducing reforms in Germany are necessary but insufficient. Without a response to Chinese distortions, the deficit will continue to grow, deepening the "China shock" — the disruption caused by the flood of cheap Chinese goods.
The record deficit carries serious consequences for German industry. Falling exports to China weaken the export sector, which is a pillar of the German economy. At the same time, rising imports intensify competition for domestic manufacturers, potentially leading to job losses and erosion of competitive standing. It amounts to a double shock: the loss of export markets on one hand, and a surge of cheap imports on the other.
In the broader context, the deficit underscores Europe's dependence on Chinese supplies, which carries geopolitical risks — especially amid tensions over Taiwan and technology trade. For the EU, it is a challenge to strengthen its own trade policy. Germany, as the bloc's largest economy, feels it most acutely — the deficit with China accounts for a significant portion of the EU's overall trade balance.
Jurgen Matthes of IW Cologne is a key voice in this debate in Germany. In his commentary, he describes the situation as strong evidence of competition distortions by China. This signals the need for a robust trade response from Brussels, including possible anti-dumping tariffs or bilateral negotiations.
Similar conclusions emerge from a Berliner Zeitung report, which noted that despite declining exports to China since 2022, imports remain elevated, making China the top partner. IW experts are calling for domestic reforms — such as lower energy costs and less bureaucracy — but stress that without confronting Chinese subsidies, the problem will only grow.
Germany's record trade deficit with China in 2025 is not merely a statistic but a symptom of deeper problems in global trade. Germany will pursue a two-track approach: reforming its economy internally while pressing the EU externally to counter unfair competition.
