In the first half of 2022, the German economy has become scarily more dependent on China as they’ve seen direct investment and its trade deficit reaching new heights. Growth in German exports to China has decreased, according to a study conducted by the German Economic Institute. Juergen Matthes, the author of the study, said, "The German economy is much more dependent on China than the other way round.”

Juergen Matthes warned of the dependence and what challenges it will pose for the future political relationship between Germany and China. "Yet despite these dangers and problems, economic interdependencies with China have been moving in the wrong direction at a tremendous pace in the first half of 2022," Matthes said.

According to the study’s findings, German investment in China was totaling near $10 Billion between January and June of 2022. The previous first half (January to June of 2021) saw a high of $6.2 Billion amounted in investments. Juergen Matthes gives some reasoning as to why this can be as he said, "The Chinese sales market and the profits beckoning there in the short term simply seem too attractive.”

The trade deficit of Germany’s economy with China has jumped to nearly $41 Billion by June 2022. A policy turnaround has been requested as the IW is urging a reduction in incentives for doing business with the country as well as a shift towards trade with emerging markets in Asia. German businesses themselves have also been urged to cut down on their dependency on China as the looming threat of sanctions against China still weighs big. Juergen Matthes warned businesses may be in a tough situation at that point saying, "We otherwise risk running into a 'too big to fail' situation as we saw with the banks.”