By Rene Wagner

BERLIN, May 21 (Reuters) - Foreign investment projects in Germany fell to their lowest level in nearly a decade last year as U.S. companies held back on new sites and expansions, the Germany Trade & Invest (GTAI) body said on Thursday.

The state development agency recorded 1,564 foreign investment projects last year, down 9.3% from 2024 and the fourth consecutive annual decline.

"That is a significant decline," Achim Hartig, GTAI's investor acquisition expert, told Reuters, adding that the drop was still only about half as steep as in Europe overall and slightly below the global trend.

CHINA OVERTAKES U.S. AS TOP FOREIGN INVESTOR

China overtook the United States as the biggest source of foreign investment projects in Germany, with 228 projects, while U.S. projects fell to 206, their lowest level since 2016.

Switzerland ranked third with 174 projects, followed by Britain and the Netherlands.

Foreign companies planned to create around 25,000 jobs, down from nearly 30,000 a year earlier, and invest about €11.8 billion ($12.8 billion), roughly half the 2024 level, GTAI said.

Hartig said many firms were avoiding new sites because of high capital costs and were instead opting for acquisitions or mergers to gain access to established structures.