Merz's China Visit Signals Shift in Germany Trade Strategy

On Feb. 25, 2026 (ET), German Chancellor Friedrich Merz led a delegation of nearly 30 business executives to China on his first official visit since taking office, becoming the first foreign leader to visit China in the Year of the Horse under the Chinese lunar calendar.

A Carefully Prepared Visit Sends Clear Signals

Ahead of the trip, German media reported that Merz hosted a private dinner at the Chancellery with several China experts to discuss bilateral strategy in depth. According to Germany's Der Spiegel, the chancellor had never prepared so meticulously for an overseas visit.

The itinerary was intensive and strategically designed.

In Beijing, Merz attended a roundtable of the Sino-German Economic Advisory Committee and held talks with Chinese leaders. He also toured the Forbidden City and visited a production line of Mercedes-Benz. The localized production line, with a localization rate of 70%, reportedly operates 15% more efficiently than comparable facilities in Germany.

In Hangzhou, Merz visited Chinese robotics firm Unitree Robotics and Germany's Siemens Energy. Known as China's 'No.1 digital trade city', Hangzhou's selection as the second stop underscores Germany's strong interest in China's technological innovation ecosystem.

Prior to departure, Merz publicly stated: 'We need to develop economic relations with countries around the world, and that of course includes countries like China.'

Is China Regaining Its Position as Germany's Largest Trading Partner?

Data released by the Federal Statistical Office of Germany show that in 2025, bilateral trade between Germany and China reached €251.8 billion, up 2.1% year on year. In contrast, Germany-U.S. trade fell 5% to €240.5 billion amid renewed tariff disputes.

1. First, the backlash effect of U.S. tariffs.

Under the renewed tariff policies of U.S. President Donald Trump, higher duties on European steel, aluminum, automobiles, and machinery led to a 9.4% drop in German exports to the United States, with car and auto parts exports plunging 17.8%. Volkswagen's plant in Tennessee was forced to scale back production due to surging component costs, while Siemens' energy projects in the U.S. stalled amid approval delays.

2. Second, the sustained pull of the Chinese market.

Despite global economic headwinds, China's demand for German high-end products remained robust. In 2025, BMW's sales in China hit a record high, accounting for nearly one-third of its global deliveries. BASF's $10 billion integrated site in Zhanjiang became fully operational, and Siemens Healthineers secured imaging equipment contracts worth billions of yuan with Chinese hospitals.

3. Third, deeply embedded industrial supply chains.

Approximately 40% of German manufacturing companies acknowledge that China accounts for more than 20% of their core supply chains. From graphite, cobalt, and lithium for electric vehicles, to specialty gases for chip packaging and servo motors for industrial robots, China has become an 'invisible pillar' of German manufacturing competitiveness.

The Future Trajectory of China–Germany Trade

Merz's China visit is expected to reshape the future framework of bilateral trade. Trade data from 2025 show a pattern of 'steady overall growth but structural divergence'.

While total trade expanded 2.1% against the trend, sectoral dynamics diverged significantly. China's exports to Germany of new energy vehicles, robotics, and electromechanical products surged sharply, while Germany's exports of automobiles and chemical products to China declined noticeably. The bilateral relationship is shifting from traditional complementarity toward a hybrid model of 'competition plus cooperation'.

Based on the core themes of the visit, three clear directions are emerging:

1. Deeper cooperation in advanced manufacturing and new energy.

Both sides are expected to strengthen collaboration across automotive supply chains, renewable energy, and the circular economy. German firms are likely to expand R&D and production capacity in China, while Chinese companies may leverage German distribution networks to further penetrate European markets.

2. From technological rivalry to complementary innovation.

Merz's visit to Unitree Robotics signals potential cooperation in artificial intelligence, humanoid robotics, and industrial automation. Joint R&D and market collaboration could help reduce technological barriers and foster mutual gains.

3. Gradual optimization of trade structure.

Germany is expected to push for expanded exports to China, while China may further open its market. Bilateral trade in agricultural products, pharmaceuticals, and high-end equipment is likely to increase, helping to ease structural imbalances.

As global trade tensions persist and supply chains undergo reconfiguration, Merz's first China trip underscores a pragmatic recalibration of Germany's economic diplomacy — with China once again at the center of Europe's largest economy's external trade strategy.