German Chancellor Friedrich Merz used meetings with President Xi Jinping and Premier Li Qiang this week to press for deeper economic cooperation with China while warning about unfair competition and a widening trade imbalance. He framed expanded engagement as necessary given volatile U.S. trade policy, but emphasized that clearer, enforceable rules are needed to manage competition between the two economies.
Avoiding the term “systemic rival” that had angered Beijing under his predecessor, Merz led a delegation of roughly 30 German business leaders to Hangzhou, a Chinese tech hub, and met senior Chinese and German industry figures. China’s Foreign Ministry described the trip as evidence of “practical cooperation,” with spokesperson Mao Ning calling the visit “fruitful and significant.” Merz highlighted a pledge by Chinese buyers to take 120 additional Airbus aircraft as a concrete example of what high-level engagement can deliver.
Analysts said the visit was designed to show both sides want to keep ties steady despite rocky transatlantic relations. Nadine Godehardt of the German Institute for International and Security Affairs (SWP) said the trip came at a sensitive moment for transatlantic ties. Wan-Hsin Liu of the Kiel Institute for the World Economy argued the main accomplishment was re-establishing in-person channels and avoiding diplomatic missteps.
Germany and the EU are key markets for Chinese green-energy and electric-vehicle exporters. As Europe’s industrial heavyweight, Germany can shape EU economic policy and act as a gatekeeper for market access. Liu noted Europe’s comparatively high purchasing power and large decarbonization needs make it an attractive outlet for China, which is coping with massive industrial overcapacity.
Officials from the two countries signed five memoranda of understanding covering climate cooperation, animal disease prevention, the resumption of some agricultural exports, and exchanges in sports and media. Observers said those accords signal willingness to cooperate on practical matters but do not resolve core disputes such as Germany’s rising trade deficit with China or Beijing’s controls on strategic exports like rare earths.
The trade gap was a central topic. Germany’s Federal Statistics Office reported the deficit with China rose to more than €89 billion in 2025, up from nearly €67 billion in 2024. Merz told Premier Li the deficit had “quadrupled in five years,” calling the trend “not healthy.” He urged fair competition for German firms, pointing to state subsidies, restricted market access and opaque regulations as persistent problems. “We must be able to rely upon agreed rules,” he said.
Analysts cautioned that Merz’s visit was unlikely to force immediate policy reversals in Beijing. Godehardt suggested his aim was to set limits and clarify German and European interests rather than produce rapid change. Liu added that unless China accepts that its policies undercut fair competition, substantive shifts are unlikely to follow from a single trip.
Other sensitive issues remain, including Beijing’s approach to the renminbi’s exchange rate and state support for strategic industries—measures Western governments view as market-distorting but which China defends as industrial policy. Supporters of the trip say Merz restored a useful communication channel that can reduce rumor-driven panic and buy time to negotiate clearer rules and guardrails for economic relations.