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German Chancellor Friedrich Merz has called for a reset in Germany’s trade
relationship with China, describing the current economic imbalance between the
two nations as “unhealthy.” His comments came during an official visit to Beijing,
where he met with Chinese President Xi Jinping and other senior leaders to discuss
trade, economic cooperation, and geopolitical tensions.
The visit marks an important moment in German foreign and economic policy.
Germany has long been one of China’s strongest European trading partners, but
recent economic data shows a widening gap that has raised serious concerns in
Berlin. In 2025, Germany’s trade deficit with China reached approximately €90
billion, a figure that has quadrupled since 2020. For many policymakers and
business leaders, this trend signals structural problems that can no longer be
ignored.
Germany’s economy is heavily dependent on exports. For decades, German
companies have relied on strong global demand for automobiles, industrial
machinery, chemicals, and advanced engineering products. China once
represented a rapidly expanding market for these goods. However, the balance of
trade has shifted significantly in recent years. Imports from China have grown
faster than exports, driven by Chinese dominance in sectors such as electric
vehicles, renewable energy equipment, batteries, electronics, and steel.
During his meetings in Beijing, Merz acknowledged the importance of cooperation
but stressed that trade must be fair and balanced. He pointed to what he described
as overcapacity in China’s industrial sector. Overcapacity occurs when production
exceeds domestic demand, pushing companies to export surplus goods at
competitive prices. European business leaders argue that this practice, combined
with state subsidies and financial advantages, creates unfair competition for
German manufacturers.
Merz made it clear that Germany does not seek confrontation. Instead, he
emphasized transparency, reliability, and respect for internationally agreed trade
rules. According to the chancellor, competition between companies must take
place on a level playing field. His message was firm but measured, reflecting
Germany’s attempt to protect its economic interests while maintaining diplomatic
stability.
The issue of manufacturing job losses is particularly sensitive in Germany. The
country’s industrial sector has long been the backbone of its prosperity. However,
reports indicate that roughly 10,000 manufacturing jobs are being lost each
month. Many industry representatives attribute these losses to intense
competition from lower-priced Chinese imports. The automotive supply chain,
mechanical engineering firms, and heavy industry have been especially affected.
German business associations urged Merz before his trip to take a stronger stance
on Chinese industrial policies. They called attention to subsidies, export financing
mechanisms, and other practices that may distort global markets. By raising these
issues directly with Chinese leaders, Merz signaled that Berlin is listening closely
to domestic concerns.
Despite the tensions, the relationship between Germany and China remains
economically significant. China was still Germany’s sixth-largest export
destination in 2025. Major German corporations continue to see opportunities in
the Chinese market, particularly in aerospace, automotive innovation, and green
technologies. During the visit, Merz highlighted potential aircraft orders for Airbus,
demonstrating that cooperation in high-value industries continues.
The chancellor traveled with a delegation of approximately 30 business executives,
underscoring Germany’s intention to maintain strong commercial ties. This
approach reflects a broader European strategy often described as “de-risking”
rather than decoupling. De-risking aims to reduce economic vulnerabilities and
dependencies without cutting off trade entirely.
Global trade dynamics have become more complicated in recent years. Rising
geopolitical tensions, supply chain disruptions, and debates over economic
security have changed how governments view international commerce. Germany,
as Europe’s largest economy, finds itself navigating a difficult path. It must balance
the benefits of open markets with the need to protect strategic industries and
national resilience.
Merz’s remarks also touched on geopolitical issues beyond trade. He called on
China to use its influence to help end Russia’s aggression in Ukraine. In particular,
he urged Beijing to halt exports of dual-use goods that could potentially support
military operations. Germany believes that China’s voice carries weight in Moscow,
and Merz suggested that both words and actions from Beijing could make a
difference.
This broader diplomatic context adds another layer to the trade discussions.
Economic relationships today are closely linked to security considerations and
foreign policy priorities. Germany’s leadership is increasingly aware that trade
policy cannot be separated from geopolitical realities.
Compared with other Western leaders who have recently visited Beijing, Merz
appeared more direct in addressing trade imbalances. While maintaining a
respectful tone, he did not avoid discussing sensitive economic issues. Observers
note that this reflects growing domestic pressure within Germany. Voters and
business leaders alike are questioning whether the current trade model serves the
country’s long-term interests.
Reducing a €90 billion trade deficit will not be simple. Trade balances are
influenced by consumer demand, industrial structure, exchange rates, and global
supply chains. Even significant policy adjustments may take years to produce
measurable results. However, Merz’s decision to publicly label the situation as
unhealthy suggests that change is now a priority.
Germany’s long-term economic strategy may involve several adjustments. These
could include strengthening domestic manufacturing, investing in advanced
technologies, diversifying export markets, and coordinating more closely with
European Union partners on trade policy. The goal is not isolation but resilience —
ensuring that Germany remains competitive in an evolving global economy.
China, for its part, continues to defend its industrial policies as legitimate tools for
development. Beijing argues that its economic model has lifted millions out of
poverty and contributed to global growth. Whether China will make adjustments in
response to European concerns remains uncertain. Dialogue and negotiation are
likely to continue in the months ahead.
The relationship between Germany and China stands at a crossroads. On one side
lies deep economic interdependence built over decades. On the other lies a
growing awareness of structural imbalances and strategic risks. Merz’s visit
represents an attempt to recalibrate rather than rupture this relationship.
For Germany, the challenge is clear. It must protect jobs, strengthen
competitiveness, and secure sustainable growth while maintaining access to one
of the world’s largest markets. Achieving this balance will require diplomacy,
economic reform, and cooperation at the European level.
Chancellor Friedrich Merz’s message in Beijing was therefore both pragmatic and
strategic. Germany values partnership, but it expects fairness. It seeks opportunity,
but not at the expense of stability. And it is prepared to address imbalances that
threaten long-term economic health.
As global markets continue to shift, Germany’s approach to China may serve as a
model for other advanced economies facing similar challenges. The coming years
will reveal whether efforts to rebalance trade can succeed without undermining
one of the world’s most important economic relationships.
