Germany’s outreach to China signals a reckoning, rather than a shift

German Chancellor Friedrich Merz, who heads to Beijing this week, had warned last year in relation to China that economic dependencies make Germany “susceptible to blackmail”. As chancellor, he confronts an export model under strain, a deteriorating transatlantic environment and the fiscal reality that moral posturing does not sustain an industrial economy.

Merz has never been shy about stating where he stands. As chairman of the non-profit Atlantik-Brucke from 2009 to 2019, he boosted the view that Berlin’s prosperity rests on Washington. His party was outraged in 2022 when then German chancellor Olaf Scholz approved Chinese shipping giant Cosco’s purchase of a 24.9 per cent stake in a terminal at the Hamburg port, branding it a “fatal mistake”. In the opposition, his party framed exposure to China as a strategic error; in government, Merz confronts its scale.

In 2025, China displaced the United States to regain its position as Germany’s largest trading partner, with around €252 billion (US$296.9 billion) in trade: €171 billion in imports from and €82 billion in exports to China.

An economy anchored in employment, public budgets and a technological edge built on exporting machinery, chemicals and cars might hesitate before recasting relations with its largest trading partner as a question of moral superiority. When prosperity rests on external markets, foreign policy becomes an extension of industrial policy.

The sharpest external pressure on Germany has not come from Beijing but from the country Merz most admires. Tariffs on European goods, enforced higher Nato spending, the capitulation that was the US-EU “Agreement on Reciprocal, Fair, and Balanced Trade”, and territorial pressure on Denmark over Greenland have illustrated the costs of asymmetric dependence within an alliance.

These measures have not displaced Chinese competition as the central economic test. They have, however, reordered the hierarchy of immediate constraints; Berlin is squeezed from two directions, but the nature of the pressure differs. From Washington comes alliance-based extraction and coercion. From Beijing comes competitive displacement within global value chains.

South China Morning Post