(25 November 2025 – Germany) Germany now purchases more capital goods from China than China buys from Germany as competitive pressures mount.
Germany previously dominated the global production of machinery and technology-intensive goods however in 2025 that has changed. The competitive pressure on one of Germany’s core sectors is prompting the country to rethink its trade and industrial policies to reduce its dependence on China and bolster innovation at home.
Rising energy costs, economic stagnation, real estate concerns and the highest company insolvency risk in Europe have left debt capital market investors demanding higher corporate spreads from German enterprises relative to the wider European Union (EU) area.
The final blow for some heavy manufacturers was the end of huge volumes of cheap Russian natural gas coupled with the decommissioning of German nuclear power plants.
“This is not only happening in Germany. It is also taking place in many other countries. Many countries are focusing on homeshoring advanced manufacturing capacity, investing in infrastructure, energy, defence, and supply chains. It is not only deglobalization. We are entering a global industrial renaissance” commented Apollo Chief Economist, Torsten Sløk.
“Germany is really in trouble. All the big manufacturing economies are slowing but, in Germany, this is compounded by higher energy costs. There are also challenges in the auto sector with competition coming from China” commented Barings Fund Manager Brian Mangwiro.
Source: Apollo Academy
Note: Series shown as 12-month moving average. Sources: German Federal Statistics Office (Statistisches Bundesamt), Macrobond, Apollo Chief Economist