Germany Set to Post Record Trade Deficit with Asia-Pacific in 2026 as Exports to China Fall

Germany is set to record a record trade deficit with Asia-Pacific countries estimated at about €146 billion ($163 billion) in 2026, according to a report published by German Trade and Invest (GTAI) and seen by Reuters, which attributed the trend mainly to a fall in Berlin’s exports to China.

The report said German exports to 29 major economies in the Asia-Pacific region are expected to fall by 3.2 percent this year to €185.3 billion, while imports are expected to rise by 6.4 percent to €330.9 billion.

The agency noted that China accounts for about half of Germany’s goods trade with the region, giving it a large influence over overall flows, and that the expansion of Chinese companies’ domestic production of advanced technology products, machinery and electric vehicles is weighing on German goods exporters.

The report criticized exporters’ performance in the Chinese market, noting that German exports to the rest of the region excluding China are expected to grow by 2.8 percent in 2026, with the trade deficit with those countries falling to below €35 billion.

GTAI detailed that in the first seven months of this year German machinery exports to China fell by 18 percent compared with the same period last year, while car exports fell by 30 percent.

The report added that German car sales in China have dropped to roughly half of their previous peak—which exceeded five million vehicles—amid rising market share for Chinese firms in electric vehicles and their control over battery supply chains.

On the other hand, the report highlighted that India is becoming increasingly important both as a destination for German exports and as a source of imports, with trade growing over the past decade and Germany’s imports from India diversifying to include pharmaceuticals, machine parts and clothing.

Regarding Japan, the report said it remains a relatively stable market for German companies despite a sharp decline in the yen against the euro and the dollar over the past six years, which has affected Japanese purchasing power.

The agency forecast that German exports to the 11 ASEAN member states will grow faster than imports this year, supported by aircraft deliveries, and said the region is gaining long-term importance as a source of electronics and electrical equipment alongside its traditional exports of clothing and footwear.

The report was published as German chancellor Friedrich Merz conducted a tour of Japan, South Korea and Singapore, during which he urged middle powers in Europe and Asia to build a strategic alliance on trade, technology and security.