I'm not sure I agree. The pillar of the Humbold University system is holistic learning and research with freedom from "practical" constrains and political interference. In particular it is a model of general education beyond just vocational training.
I also note that in addition to the Fraunhofer institutes which as you rightly say have a applied f9cus there are also the Max Planck Institutes with a much more fundamental focus. In fact I would argue that research in Germany is much more fundamentals focused than in many other countries.