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German Chancellor Friedrich Merz will lead a business delegation on his first official visit to China from Feb. 24 to 27, 2026. Germany’s intention to establish a “strategic partnership” with Beijing is clear, yet it is accompanied by caution and criticism toward China policy. Ahead of the visit, Merz stated that Germany needs partners who can ensure its continued prosperity. This trip will not only serve as a “stress test” of China–Germany relations, but also test Europe’s strategic autonomy amid U.S.–China rivalry.
During his trip next week, Merz will have his first direct meetings with Chinese Communist Party leader Xi Jinping and Premier Li Qiang.
Preparations for the visit highlight its importance. According to Deutsche Welle, Merz deliberately hosted a dinner with three scholars, one writer, and two business leaders to gather advice on China. Jörg Wuttke, a representative of the European business community, revealed that Merz is particularly focused on how to build rapport with Xi Jinping, emphasizing that “understanding how to make China listen is crucial.”
Experts recommended books on tensions in the Taiwan Strait and China’s technology sector. This reflects the German government’s comprehensive considerations across diplomatic, economic, and security issues—especially against the backdrop of U.S. President Donald Trump’s renewed tariff war, which has increased Europe’s urgency to safeguard its own interests.
Chinese and German flags fly in Beijing on Jan, 31, 2012. (Image: ED JONES/AFP via Getty Images)
China–Germany economic relations: cooperation and friction
Economic ties are the core focus of the visit. As Europe’s largest economy, Germany is highly dependent on the Chinese market, but frictions have intensified in recent years. Mikko Huotari, head of the Mercator Institute for China Studies (Merics), told Reuters that there is currently “considerable friction” in bilateral economic relations. In 2025, German exports to China declined significantly, while supply issues involving key raw materials such as semiconductors and rare earths became increasingly prominent. Huotari stressed that reducing dependence on China has become a strategic priority for Germany, although the Chinese market will “continue to attract” German companies. He noted that if Merz can establish “some kind of new normal” in relations to lay the groundwork for the next three years of cooperation, the visit would be considered successful.
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According to United Daily News, amid instability in transatlantic relations, Beijing is expanding its global influence, putting pressure on Europe to strengthen strategic autonomy. In 2025, China recorded a trade surplus exceeding $1 trillion and shifted export focus from the United States to the European market. This includes expanding rare earth export controls and restricting European firms’ market access, signaling Beijing’s politicization of economic interdependence.
In the electric vehicle sector, for example, the European Union recently proposed a “minimum price commitment” as a supplementary tool to anti-subsidy tariffs, requiring Chinese companies to maintain certain price levels in Europe to offset advantages from state subsidies. While this approach may reduce trade tensions, it could weaken EU policy effectiveness and signal to Beijing that “Europe’s principles are negotiable.”
The automotive sector exemplifies China–Germany friction. For years, German auto giants such as Volkswagen treated China as a growth engine through joint ventures. However, as Chinese brands have rapidly expanded under industrial policy support and price competition, German market share has shrunk sharply. Data from the China Passenger Car Association show that in 2025, Volkswagen’s retail market share in its two major Chinese joint ventures fell to 10.9 percent, overtaken by BYD and Geely. This reflects the impact of China’s “Made in China 2025” plan but has alarmed German industry. Some analysts argue that China’s market access serves as a “strategic lure,” aimed at absorbing Germany’s advanced technology before replacing it globally.
A woman walks past the Chinese Embassy on Dec. 11, 2017 in Berlin, Germany. (Image: Sean Gallup/Getty Images)
German machinery industry speaks out: fair competition or European countermeasures
The German Engineering Federation (VDMA) has taken a tougher stance. Executive Director Thilo Brodtmann urged Merz to press China to stop using rare earth export controls as a “political power tool” and dismantle systemic market distortions.
VDMA data show that from January to November 2025, German machinery exports to China fell 8.5 percent, while imports of machinery from China rose 12.5 percent. The association warned that German firms are not competing against competitors but against the Chinese state. So-called “zombie companies” supported by the CCP—loss-making firms sustained by state subsidies—sell products far below market prices.
VDMA called for drastic cuts to industrial subsidies, noting that Chinese industry receives four to five times more government support than other major economies. It also highlighted that China grants domestic firms a 20 percent price advantage in public procurement, violating WTO principles, and alleged that the renminbi is undervalued by as much as 40 percent, giving Chinese exporters an advantage.
A general view of the skyline of the central business district in Beijing, China during sunset on October 13, 2020. (Image: Lintao Zhang/Getty Images)
Scholar: strategic cooperation with Beijing carries high risks
Li Shaomin, a professor at Old Dominion University, told Vision Times that after visits to China by leaders of France, Canada, and the United Kingdom, Germany’s pursuit of a “strategic partnership” reflects a turn toward Beijing under pressure from Trump’s tariff policies—calling it short-sighted and dangerous.
Li argued that Germany, despite possessing capital and technology, voluntarily builds factories in China, leveraging China’s lower human rights standards and complete industrial chains to produce cheaper goods, while ignoring risks of industrial hollowing-out and technology theft. German automakers are already losing money domestically and losing share in China, yet continue investing, potentially showcasing their core technologies only to be replaced later. He said China’s mentality has shifted from “buying good foreign products” to “learning and producing them more cheaply.”
Li warned that strategic cooperation carries significant risks: Europe could be penetrated by China’s “state-backed mega-corporation” model, undermining its industrial base, especially in autos. Without learning from historical lessons, he cautioned, Europe could eventually become merely a “tourist destination.” In contrast, he advocates firm containment of CCP expansion, stronger allied coordination, and decoupling rather than hoping cooperation will sustain prosperity.
A guard raises Taiwan’s national flag along Democracy Boulevard at Taipei’s Chiang Kai-shek Memorial Hall. (Image: I-HWA CHENG/AFP via Getty Images)
Geopolitical considerations: South China Sea, Taiwan, and European autonomy
The visit is not purely economic. At a Christian Democratic Union event, Merz publicly criticized the CCP’s “aggressive” diplomacy. He stated that China has begun assertively expanding military bases in the South China Sea and surrounding Taiwan while openly declaring readiness to use force for “reunification.” This aligns with Germany’s recent naval deployments to the Indo-Pacific, reflecting Berlin’s concerns about Chinese expansion.
Huotari suggested that Merz follow previous German chancellors in clearly stating that any drastic change in the Taiwan Strait would severely damage bilateral relations. This underscores Europe’s cautious stance—avoiding entanglement in great-power conflict while emphasizing the importance of international order. If Europe makes concessions to China amid U.S. unpredictability, it may be seen as signaling that “principles are negotiable,” weakening its leverage.
Former Canadian diplomat Michael Kovrig also warned that Germany must not overlook value differences in pursuing economic ties. Kovrig, detained in China for three years after Canada arrested Huawei executive Meng Wanzhou, wrote on X that Europe has not done enough to counter Beijing’s coercive policies, including hostage diplomacy, trade barriers, and supply chain blockades. He urged Merz to seize the opportunity to chart a new direction for Germany.
German Chancellor and leader of the Christian Democratic Union (CDU) Friedrich Merz speaks at the 38th CDU federal party congress on Feb. 20, 2026 in Stuttgart, Germany. (Image: Thomas Niedermueller/Getty Images)
Europe’s response: unity and policy tools
Under the shadow of Trump’s tariff war, Merz emphasized Europe’s “dual strategy”: rebuilding partnership with the United States while maintaining EU cohesion to defend its own interests. “If the United States goes too far, we Europeans certainly have the ability to defend our interests,” he said. Recent unity over Greenland-related controversies was seen as a warning to Washington that the EU would respond to further tariff hikes.
The EU retains leverage. Its vast single market is crucial for China’s machinery, chemical, and high-tech sectors. Policy tools include trade defense measures, scrutiny of subsidized firms, and investment controls in sensitive industries. Companies entering Europe must comply with environmental, supply chain, and sustainability standards—rules often harder to circumvent than tariffs.
To enhance competitiveness, Merz’s government has called for easing regulatory burdens within the EU, though this could weaken Europe’s ability to counter China. Analysts argue that strategic autonomy depends on policy consistency among member states. Only through coordinated EU action can policy tools be effective. Merz’s China trip will serve as a key indicator of whether Germany is prepared to project European strength through unity.
VDMA’s warning is blunt: if China does not correct distortions, Europe will take unilateral action. The association urged Merz to affirm that Germany and the EU seek “constructive” cooperation—but only under “fair competitive conditions.” Otherwise, German industry will face mounting pressure and exporters will continue losing market share.
Amid the tug-of-war between economic interdependence and geopolitical tension, how Germany balances maintaining partnerships necessary for prosperity with defending European interests and values remains to be seen.
By Xiao Ran
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