Germany has seen a steady uptake in goods flowing to China, coupled with a decline in exports to the US, according to the German chambers of commerce. There are concerns over US protectionist policies.
China grew to become Germany's top trading partner over the past year according to figures released on Friday by the Association of German Chambers of Commerce and Industry (DIHK).
The data gathered by the DIHK shows that the United States dropped down from top trading partner in 2015 to just third-highest in 2016. France maintained its place as Germany's second most important partner.
While the US still remains Germany's largest export market, DIHK reported that German goods flowing into the US decreased by more than 5 percent in 2016 from the previous year. It signaled slightly weaker than expected economic growth in the US, coupled with a more domestically oriented market as reasons for the slowdown in trade.
The US overtook France to become Germany's top trading market in 2015. Before that, France had held on to the top spot for some 60 years.
Chinese growth spurred by loose credit and government-backed investments
"With its economy on an upward trajectory, the US could rise back up to second place in the coming year, unless the new US President's tariff policies dampen the country's growth outlook," DIHK's foreign business chief Volker Treier said.
According to DIHK, China's rise has mainly been due to a significant uptake in German exports in the latter part of 2016. Meanwhile, domestic growth in the Asian powerhouse has been spurred by government-backed initiatives, such as investments in infrastructure, as well as a loose credit policy.
Germany and China's trading relationship has been boosted in recent years but a number of obstacles remain.
Obstacles to a sound trading partnership remain
DIHK described China's ascension to becoming Germany's number trading partner as a "changing of the guard." However, the group said that barriers still remained before the two countries could claim to enjoy a truly prosperous economic relationship.
Last year, Chinese firms announced or completed the acquisitions of German companies worth a record 11.3 billion euros ($12.3 billion), according to data compiled by financial news outlet Bloomberg.
However, at the same time, German investors have voiced grievances, saying they have not received reciprocal benefits dealing in China, citing a lack of market access, price dumping and technology theft.
Nevertheless, Sigmar Gabriel, Germany's Foreign Minister, then Economy Minister, has called for stronger trading relations between Europe and the Asia amid US threats to impose increased tariffs on imports.
dm/jm (dpa, DIHK)