Merz Pushes High-Stakes Reset With China

German Chancellor Friedrich Merz used his first official visit to China to deliver a dual message: Germany wants stronger economic ties with Beijing but not at any cost. As the world’s second- and third-largest economies navigate rising geopolitical friction and trade disputes, Merz signaled both openness and resolve in redefining the partnership.

Meeting Chinese President Xi Jinping, Merz acknowledged longstanding cooperation while stressing the need for candid discussions.

“There are challenges which we should talk about today, but the framework in which we operate is exceptionally good and we have worked together very well over the past decades,” he said.

Xi responded by emphasizing stability amid global turbulence, stating that the more unpredictable the world becomes, the more China and Germany must strengthen strategic communication and mutual trust.

We are two of the three largest industrial nations in the world. That is a great responsibility, but it is also a great opportunity.

German Chancellor Friedrich Merz

In talks with Chinese Premier Li Qiang, Merz highlighted “very specific concerns” in bilateral cooperation. German officials have long pointed to what they describe as an undervalued yuan, state-backed subsidies, and industrial overcapacity that have fueled large Chinese trade surpluses with Germany.

At the same time, Berlin remains deeply reliant on China’s vast consumer market and advanced manufacturing ecosystem. Speaking at a business forum attended by senior executives, Merz made clear: “We want Chinese investment in Germany.”

The visit included a delegation of 30 major firms, among them automotive giants Volkswagen and BMW, both grappling with intensifying competition from Chinese manufacturers and mounting pressure from trade imbalances.

Despite strong rhetoric about cooperation, the formal outcomes were modest. Five agreements were signed covering climate and green transition efforts, animal disease prevention, poultry trade protocols, and sports cooperation in football and table tennis.

The narrow scope of the deals contrasted with broader agreements recently concluded between China and other Western partners, highlighting the complexity of the Germany–China relationship.

Beijing is increasingly positioning itself as a stable economic partner at a time when Europe faces supply chain vulnerabilities and global trade disruptions. Premier Li called for joint efforts to safeguard multilateralism and free trade — remarks widely interpreted as a reference to shifting U.S. trade policies.

Within Europe, debates over “de-risking” and labeling China a “systemic rival” continue to shape policy discussions. Yet Germany’s powerful industrial base remains closely tied to Chinese demand, creating a delicate balancing act for Berlin.

Merz’s visit may mark the beginning of a recalibrated relationship — one that seeks to preserve economic interdependence while pushing for greater reciprocity and strategic balance in an increasingly fragmented global order.