Germany and China Navigate a Complex Partnership: Balancing Trade, Competition and Geopolitical Shifts
German Chancellor Friedrich Merz’s recent visit to China, culminating in meetings with President Xi Jinping and Premier Li Qiang, signals a continued commitment to strengthening economic ties despite a backdrop of global turbulence and differing geopolitical views. The visit, occurring as transatlantic relations face challenges, underscores Germany’s desire to maintain access to the crucial Chinese market and address growing trade imbalances.
The Push for Deeper Economic Ties Amidst Global Uncertainty
With both nations ranking among the world’s largest economies, the relationship between Germany and China carries significant weight, impacting not only bilateral interests but also the broader European and global landscape. Merz’s trip, accompanied by a substantial business delegation, highlights the importance of direct engagement, particularly as the unpredictable nature of US trade policy adds to global economic anxieties. The pledge to deepen ties comes as China seeks to maintain its role as a key export destination and a source of investment.
Addressing Trade Imbalances and Fair Competition
A central theme of Merz’s discussions was the need for fairer competition and a reduction in the growing trade deficit Germany faces with China. In 2025, this deficit exceeded 89 billion euros, a fourfold increase in the last five years. Merz directly raised concerns about state subsidies in China, limited market access for German companies, and a lack of transparency in the legal framework. He emphasized the importance of adhering to agreed-upon rules to ensure a level playing field.
Although, experts suggest immediate changes are unlikely. China views its current economic policies – including currency controls and industrial support – as legitimate tools for economic management. The focus, is on establishing a clear understanding of the issues and defining areas where German and European interests can be better protected.
Airbus Deal Signals Continued Cooperation
Despite the concerns over trade imbalances, the visit yielded a tangible outcome: an agreement for the purchase of 120 Airbus aircraft. This deal, involving a major European manufacturer with significant production facilities in China, demonstrates the continued potential for mutually beneficial cooperation. Merz noted that the agreement was just one example of potential deals discussed during the trip, with further contracts still under consideration.
China’s Growing Industrial Capacity and European Demand
China’s increasing industrial capacity, particularly in sectors like photovoltaics and electric vehicles, is meeting growing European demand for solutions related to the energy transition. However, this also presents challenges for European manufacturers facing increased competition. China’s large domestic market is insufficient to absorb its full production capacity, making the EU a crucial export destination. Germany, as the largest economy in the EU and a major exporter, plays a key role in shaping European trade policy.
The choice of transportation during Merz’s visit – being chauffeured in a Chinese-made Hongqi limousine – symbolically highlighted China’s growing industrial prowess. This contrasts with the historical reliance on German automotive brands.
Navigating a Shifting Geopolitical Landscape
The visit occurred at a time when Germany is balancing its relationships with both the US and China. Merz is scheduled to meet with US President Donald Trump shortly, indicating a deliberate effort to maintain strong ties with both major powers. The situation is further complicated by differing perspectives on Russia’s war in Ukraine, a point of contention between Germany and China.
Experts emphasize the importance of maintaining open communication channels with China. Direct dialogue, as demonstrated by Merz’s visit, is seen as crucial for managing the complex relationship and ensuring a degree of stability in a turbulent world.
FAQ
Q: What was the main goal of Chancellor Merz’s visit to China?
A: The primary goal was to strengthen economic ties, address trade imbalances, and foster open communication despite geopolitical differences.
Q: What specific concerns did Chancellor Merz raise with Chinese leaders?
A: He raised concerns about state subsidies, limited market access, and a lack of transparency in the Chinese legal framework.
Q: What was the significance of the Airbus deal?
A: The Airbus deal demonstrated continued potential for mutually beneficial cooperation between Germany and China.
Q: Is Germany shifting away from the US and towards China?
A: Germany is attempting to balance its relationships with both the US and China, recognizing the importance of maintaining strong ties with both major powers.
Did you know? China’s export surplus with Germany has quadrupled in the last five years, reaching over 89 billion euros in 2025.
Pro Tip: Businesses looking to engage with the Chinese market should prioritize building strong relationships with local partners and conducting thorough due diligence.
What are your thoughts on the future of Germany-China relations? Share your insights in the comments below!
