Bold claim: Germany’s move to reset with China is a high-stakes gamble that could redefine Europe’s economic future. But here’s where it gets controversial: can Berlin balance a deep, trade-heavy partnership with Beijing while protecting its own manufacturers from a surplus-driven, subsidized rival? That tension sits at the heart of Chancellor Friedrich Merz’s trip to Beijing, where he presses for a “comprehensive strategic partnership” with China—the nation’s biggest trading partner last year—even as German business leaders warn of overexposure and cascading supply-chain risks.
On Merz’s first visit to China as chancellor, he arrived with a sizeable business delegation and told President Xi Jinping that he wants to deepen the partnership. Xi welcomed the outreach, highlighting the delicate balancing act Merz faces: Germany’s economy remains heavily invested in China, yet the relationship has grown increasingly asymmetrical due to China’s export strength and policy tools. As the world grows more turbulent, Merz argued that China and Germany must boost strategic dialogue and mutual trust.
This visit follows similar outreach from European peers, underscoring Europe’s desire to shore up ties with Beijing after a period of tension with Washington. For Germany, the stakes are especially high: China’s vast consumer market and its sophisticated manufacturing sector are vital to an economy still clawing back from recession. Yet German firms are signaling concern over “derisking” strategies aimed at reducing strategic reliance, striking a chord with nerves about supply-security and competition.
Merz warned that while the relationship is deeply interconnected and full of opportunity, it also contains noteworthy risks—such as supply-chain fragilities exposed last year when China tightened export controls on key chips and rare earths. He pointed to the divergence in trade dynamics: a fourfold rise in the German trade deficit since 2020, a gap Berlin attributes in part to overcapacity and market-distorting subsidies that bolster Chinese exporters and a sizable €90 billion trade surplus with Germany last year.
The chancellor’s remarks emphasize a cautious stance: while he invites Chinese investment in Germany, he insists both sides must acknowledge and navigate risks. In his words, cooperation should proceed with clear-eyed realism to protect both economies’ interests.
A joint Chinese readout framed the visit as injecting fresh momentum into the partnership and noted Chinese orders for 120 Airbus aircraft as a symbol of the economic ties at stake. Premier Li Qiang echoed a cooperative spirit, signaling willingness to work with German investment in sectors ranging from automobiles and chemicals to emerging fields like artificial intelligence and biomedicine. He also pledged to address legitimate concerns of foreign-invested enterprises in Germany and encouraged more Chinese purchases of high-quality German products, signaling a reciprocal approach.
Merz’s delegation included leaders from around 30 German firms, with industry giants such as Volkswagen and BMW feeling the pressure of intensified Chinese competition. Berlin’s calculus is clear: China remains a critical market and an engine of technology and supply chains, yet the relationship requires effort to manage it responsibly and sustainably for Germany’s industrial backbone.
In the broader European context, China presents a complex image: a reliable partner in principle, but one whose market dynamics—and policy actions—continue to shape Europe’s risk profile. Europe’s supply chains are more exposed than ever, and the continent’s leaders must weigh long-term economic gains against strategic vulnerabilities. While the five agreements signed on climate cooperation, animal disease prevention, poultry trade protocols, and sports exchanges are modest in scope, they reflect a broader strategy to keep channels open and constructive.
Controversy meter rising: is Europe over-reliant on a single export and manufacturing axis in China, or does open, steady engagement still deliver the best path to resilience? And how should European leaders recalibrate policy to ensure domestic industries can compete fairly while maintaining access to China’s vast market? Share your view: should Germany deepen its China ties as a cornerstone of growth, or push harder for diversification and decoupling to safeguard post-pandemic economic stability?"
