After years of appeasement, Berlin’s attitude to China is hardening. But concrete actions remain elusive. Former Chancellor Angela Merkel came to power in 2005 as a vocal critic of China’s human rights record but gradually adopted a softer stance. While the European Union began labeling China a systemic rival, Merkel resisted the term and instead promoted a China-friendly EU–China investment accord. That initiative was ultimately blocked by the European Parliament.
Merkel’s successor, Social Democrat Olaf Scholz, introduced a tougher China policy, driven largely by pressure from his coalition partners, the Greens and the Free Democrats. His 2023 China Strategy aligned with Brussels’ “de-risking” agenda, reflecting growing caution toward economic dependence on Beijing.
The new Christian Democrat Chancellor, Friedrich Merz, has pledged continuity with Scholz’s approach but without the same emphasis on close transatlantic coordination. As the United States increases restrictions on Chinese exports, subsidized Chinese products are flowing into European markets. When Washington applies economic pressure on Europe, the continent becomes more exposed to China’s economic influence.
China now accounts for roughly 35% of global manufacturing, a share that continues to rise. Many nations face similar challenges in protecting their industrial and technological competitiveness. For Europe, the China question demands collective action — cooperation not only with the United States and other advanced economies but also with developing partners such as Brazil, India, South Africa, Indonesia, and Vietnam. Yet as this vision finds little resonance in Washington, Germany and the EU are increasingly seeking alternative partnerships.
Merz has tightened Germany’s stance toward Beijing. While several European leaders have made early visits to China, he postponed his own trip. His first phone call with Chinese President Xi Jinping took place more than two weeks after taking office, during which he pressed for China’s support for a ceasefire in Ukraine and for fair economic competition based on reciprocity.
Merz has also voiced strong support for Taiwan, framing Germany’s China policy within what he calls a new systemic confrontation between liberal democracies and autocratic regimes.
Foreign Minister Johann Wadephul shares this skepticism. During a meeting in the summer of 2025 with Chinese Foreign Minister Wang Yi, Wadephul addressed China’s support for Russia’s war in Ukraine and rejected Beijing’s proposal for a “comprehensive strategic partnership.” He also criticized China’s actions in the South China Sea, describing them as threats to Asian security and violations of the rules-based international order. When Beijing protested, Wadephul reaffirmed his position.
Despite these assertive political statements, many fundamental questions remain unresolved. The two parties traditionally most critical of China — the Greens and the Free Democrats — emerged weakened from the 2025 election. As a result, few political voices are calling for a genuine reduction in Germany’s growing economic dependence on China.
Within Merz’s own Christian Democratic Union, economic pragmatism still dominates. The Bavarian Christian Social Union, closely tied to corporations such as Siemens and BMW, views China primarily through the lens of trade opportunities. For these multinationals, the idea of de-risking carries little appeal. Volkswagen, for instance, is expanding its investments in China, manufacturing and exporting vehicles from its Chinese plants.
Chancellor Merz has warned major German companies that his government will not bail them out if their China ventures fail. Yet that warning appears uncertain, especially given Germany’s reluctance to support EU tariffs on heavily subsidized Chinese electric vehicles.
German business itself is divided. Large corporations — including automotive giants and industrial leaders such as BASF and Siemens — remain deeply invested in China and continue to profit from the Chinese market. In contrast, the country’s small and medium-sized enterprises, the famed Mittelstand, are losing market share both in China and globally due to state-backed Chinese competition and unfair trade practices.
One telling indicator is the engineering sector: China’s global market share, which was near zero in 2004, has climbed to 12%, while Germany’s share has declined.
A trade and investment policy oriented toward the Mittelstand would take a far tougher line on China. In June 2025, the VDMA engineering association — traditionally a defender of free trade — issued a strategy paper urging protection for European industry under the slogan “China does not play fair – we need a political reaction.” Its recommendations were clear: impose tariffs, enforce local content requirements, and ensure that Chinese imports comply with European standards.
A separate business survey by the Federation of German Industries (BDI) revealed widespread concern across multiple sectors, including steel, biotechnology, chemicals, medical technology, machinery, textiles, and telecommunications, all reporting growing difficulties competing with state-supported Chinese companies.
The findings from both VDMA and BDI should have ignited a national debate on Germany’s industrial future. Yet that discussion has not taken place — not in the media, not in parliament, and not within the government itself.
The new German leadership entered office promising a firmer stance against China. The danger remains, however, that it will continue to talk tough while avoiding the difficult choices needed to safeguard Germany’s long-term economic independence.