Germany faces record trade deficit with China

[BERLIN] Germany faces a record trade deficit of 87 billion euros (S$130.8 billion) with China this year, according to a forecast by state-owned international economic promotion agency Germany Trade & Invest (GTAI) seen by Reuters.

The deficit in value of exports versus imports will surpass 2022‘s previous record of just over 84 billion euros, said GTAI. “This is an imbalance, and it’s certainly not in our interest,” said Christina Otte, GTAI’s regional deputy director.

Due to the shifting trade dynamics caused by US President Donald Trump’s tariffs, China reclaimed its title as Germany’s largest trading partner in the first eight months of 2025, one it had held for eight years until the US took it last year.

However, Germany has looked to diversify its supply chains and reduce its reliance on China for critical products such as chips and rare earths to make its economy less exposed to trade tensions as well as shipping and other logistics disruptions.

In a recent sign of the tensions, Germany’s foreign minister cancelled a planned trip to China last month at short notice.

On the one hand, Otte said, the trade imbalance is due to weak German exports to China, which are set to fall by over 11 per cent this year.

“China is slipping as a customer market. This year, China is likely to rank only sixth, behind Italy,” said Otte. Just a few years ago, it was in second place behind the United States.

And on the other hand, more Chinese goods are ending up in Europe’s largest economy, likely also as a consequence of high US tariffs.

“We are seeing diversionary effects here,” said Otte.

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Chinese data for the January-September period showed exports to the US plummeted 17 per cent, while those to Germany were up 11 per cent. REUTERS