German investment in China rises to record high

BERLIN, Feb 14 (Reuters): German direct investment in China rose by 4.3 per cent to a record high of 11.9 billion euros ($12.7 billion) last year and also increased as a share of the country's overall investment abroad, official Bundesbank data analysed by the IW institute showed.
The data underscores concerns that German firms continue to invest heavily in China despite the government's pleas for them to reduce their exposure and its sharp cut in investment guarantees for the country.
German companies have invested as much in China in the last three years as in the previous six years, according to the IW institute report that was obtained exclusively by Reuters.
Still, German investments in China in the last four years were financed entirely by reinvested profit and companies have also withdrawn capital, painting a more nuanced picture.
"We can assume that there remains a split between the few big companies and the majority of small and medium-sized enterprises," IW economist Juergen Matthes said in the report.
"Other studies and anecdotal evidence support the thesis that some medium and small-sized businesses are seeking to reduce their engagement with China or even to exit entirely."
The proportion of German firms exiting the Chinese market or considering doing so has more than doubled to 9 per cent in the last four years, a survey by the German Chamber of Commerce in China published last month found.