Germany Seeks Stronger Economic Ties with China Amid Global Uncertainty

German Chancellor Friedrich Merz is set to make his first official visit to China, with the trip aimed at identifying practical opportunities for bilateral cooperation. The visit comes at a time of heightened global turbulence, as the rules-based international order faces mounting pressure. Uncertainty surrounding tariff policies from the United States has created economic challenges for Germany, while geopolitical tensions over Greenland have further strained transatlantic relations. Against this backdrop, Berlin is increasingly looking to strengthen economic ties with major global economies such as China in order to bring greater certainty to an unpredictable international environment.

In recent months, Germany's strategy toward China has shown signs of adjustment. The policy focus has gradually shifted from risk management back toward economic cooperation, as Berlin attempts to strike a new balance between viewing China as a 'systemic competitor' and as an 'economic partner'. Initially, the Merz administration aligned closely with the European Union's 'de-risking' approach, emphasizing competition and strategic rivalry while avoiding explicit references to partnership. However, as tensions between Germany and the United States have persisted, Merz's China policy has become increasingly pragmatic.

During the G20 Johannesburg Summit 2025, Merz publicly stated that China remains an important trading partner for Germany. In remarks delivered one week before his planned visit to China, he emphasized the need for diversified strategic partnerships and included China within a broader framework of global cooperation aimed at 'jointly shaping the future'.

Economic Pressures Drive Policy Pragmatism

Germany's more pragmatic approach toward China is shaped by several strategic considerations and domestic realities.

First, Berlin faces mounting economic pressure at home. Revitalizing the German economy has become a top priority for the Merz government. Influenced by both domestic and international factors, Germany's economy stagnated in 2023 and 2024, followed by only a weak recovery in 2025. Escalating geopolitical tensions have challenged the foundations of Germany's export-oriented economic model. To restore competitiveness, structural reforms and expanded international partnerships have become essential, making economic diplomacy a central pillar of foreign policy.

Second, Germany seeks to offset risks associated with U.S. tariff policies. Among EU member states, Germany is particularly vulnerable to transatlantic trade friction. The United States remains Germany's largest export market, and Germany maintains a significant trade surplus with Washington. In 2025, German exports to the United States dropped sharply following new tariff measures. Given the vast economic asymmetry between the two countries, Berlin has limited leverage in addressing these pressures. In contrast, trade between China and Germany stabilized and began to rebound in 2025, with China once again becoming Germany's most important trading partner. As tariff policies introduced under Donald Trump continue to create uncertainty in global markets, closer economic ties between the world's second- and third-largest economies are increasingly seen as vital for stabilizing global supply chains.

Third, China's expanding global influence has also shaped Germany's strategic outlook. Speaking at the annual meeting of the World Economic Forum Annual Meeting in Davos, Friedrich Merz praised China's rise as a major global power driven by 'strategic foresight'. Compared with the United States, China's policy approach is often viewed in Berlin as more consistent, stable and predictable. As a major power playing a significant role in the restructuring of the global order, China is seen as an essential actor in international governance.

The Merz government also seeks to redefine Germany's global role as a 'strong and responsible' European partner capable of contributing more actively to international security and political affairs. While Germany will continue cooperating closely with the United States, Berlin is increasingly exploring a broader network of strategic partnerships beyond the traditional transatlantic framework.

Business Influence and Industrial Competition

Germany's economic community plays a significant role in shaping the country's China policy. Economic and trade relations have long served as the foundation of China-Germany ties, with German companies playing a key role in implementing bilateral strategies. Facing growing pressures in both domestic and international markets, many German businesses favor pragmatic economic cooperation rather than value-driven foreign policy approaches. Merz has historically maintained close ties with Germany's industrial sector, which could lead his government to adopt a more flexible interpretation of 'de-risking' in practice.

At the same time, China's rapid progress in sectors such as electric vehicles and artificial intelligence has intensified competition for Germany, particularly in third-party markets. As a global manufacturing and export powerhouse, Germany is increasingly encountering competitive pressure from Chinese companies. However, shifts in global competitiveness are also closely linked to Europe's own structural challenges.

The European Commission's economic security strategy toward China is framed around the '3P' approach: protect, promote and partner. Within this framework, different European countries emphasize different priorities. France tends to prioritize protection through trade defense measures, while Germany places greater emphasis on promotion and partnership, focusing on strengthening its own competitiveness.

Strategic Importance of Stable China-Germany Cooperation

Despite a broader wave of de-globalization, China remains one of the largest and fastest-growing mature markets in the world. Meanwhile, Germany's economic momentum has weakened, and the Merz government faces significant challenges in advancing reforms related to economic policy, energy transition and climate strategy.

Against the backdrop of uncertain transatlantic relations and a rapidly evolving geopolitical environment, maintaining stable and constructive cooperation between China and Germany carries growing strategic importance for both sides as well as for the broader global economy.