Merz’s China Trip Signals German Economic Anxiety Amidst Shifting Trade Dynamics
German Chancellor Friedrich Merz is set to visit China next week, a move that underscores Germany’s complex economic relationship with Beijing as it navigates a changing global trade landscape. The visit, announced during the Christian Democratic Union (CDU) party congress in Stuttgart, comes as China has reclaimed its position as Germany’s top trading partner, with bilateral trade totaling €251.8 billion in 2025 1.
A Return to Familiar Territory: China as Germany’s Top Trading Partner
Despite a brief period in 2024 where the United States surpassed China as Germany’s largest trading partner, China has reasserted its dominance. From 2016 to 2023, China consistently held the top spot 1. This enduring economic connection has been a cornerstone of Germany’s export-oriented economic model, particularly its reliance on Chinese demand for its industrial goods.
Challenges to the German Economic Model
However, the foundations of this model are facing increasing strain. German car manufacturers are encountering growing competition from Chinese electric vehicle (EV) producers, while simultaneously experiencing declining sales within the Chinese market 2. This has led to a widening trade deficit, with Germany importing €170.6 billion worth of goods from China in 2024, more than double the €81.3 billion it exported in return 1. The loss of access to affordable Russian energy and rising labor and regulatory costs further exacerbate these challenges.
Merz’s Visit: A Search for Solutions?
Chancellor Merz’s trip to Beijing, scheduled for next week, will include meetings with Premier Li Qiang and Chinese leader Xi Jinping 1. The visit will focus on “competition” and finding “the right balance of cooperation” 1. He will be accompanied by a business delegation, aiming to deepen trade and cooperation 2. The itinerary includes visits to Mercedes-Benz facilities in Beijing and robotics firm Unitree and Siemens Energy in Hangzhou 2.
Limited Options and a Lack of Fundamental Reform
Despite calls for a change in course, a significant overhaul of Germany’s economic strategy appears unlikely. Deeply entrenched supply chain dependencies and the continued importance of the Chinese market, even with its shrinking share, limit Berlin’s options. Potential outcomes from the visit include concessions regarding pricing for Chinese EVs and the establishment of Chinese factories within Germany, but these are seen as palliative measures rather than fundamental solutions 1.
As the European Union navigates trade disputes with China while simultaneously seeking improved relations amid U.S. Trade volatility, Germany appears to be facing a period of managed decline for its industrial base.
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