German Chancellor Friedrich Merz is reportedly preparing for his inaugural visit to China later this year, accompanied by a delegation of top business leaders. This anticipated trip, which could take place as early as October, comes at a pivotal moment for both countries. The visit is expected to reinforce the economic and diplomatic ties between Germany and China, two of the world’s largest economies, amid a backdrop of shifting global alliances and ongoing trade tensions with the United States.
The planned visit follows a recent diplomatic push by China, including a European tour by Chinese Foreign Minister Wang Yi, aimed at laying the groundwork for broader EU-China engagement. For Germany, the trip is not only a chance to reaffirm its commitment to strong bilateral relations but also an opportunity to address concerns about economic dependencies and strategic vulnerabilities. The German chancellery has not officially confirmed the details, and the final itinerary remains subject to change.
Trade, Investment, and Sectoral Shifts:
Germany and China have maintained a robust economic partnership for over a decade, with China serving as Germany’s largest trading partner since 2016. In 2024, bilateral trade reached approximately EUR 246 billion, highlighting the depth of their commercial ties. Despite a slight decline in trade volumes due to weaker demand and increased competition, the relationship remains vital for both economies.
German exports to China are dominated by motor vehicles, machinery, and chemicals, reflecting the strength of Germany’s engineering and manufacturing sectors. Meanwhile, imports from China are led by electronics, machinery, textiles, and, increasingly, green technologies such as solar panels and batteries. China supplies a significant portion of Germany’s renewable energy components, making it an indispensable partner in Germany’s green transition.
Recent years have seen German companies, particularly in the automotive sector, ramp up investments in China. Major automakers like Volkswagen, BMW, and Mercedes-Benz are expanding electric vehicle production and research facilities to cater to the Chinese market. Strategic localization and high-tech partnerships have become the norm, with German firms seeking to remain competitive amid the rise of Chinese domestic champions.
On the investment front, German foreign direct investment in China reached EUR 5.7 billion in 2024, with the automotive and high-tech manufacturing sectors leading the way. A notable trend is the reinvestment of profits by German companies in their Chinese operations, signaling long-term confidence despite geopolitical uncertainties. Conversely, Chinese investment in Germany is increasingly focused on advanced manufacturing and green technology, though it remains subject to careful regulatory scrutiny.
Policy Shifts and Strategic Recalibration under Merz:
The political landscape in Germany has undergone significant changes in 2025, with Chancellor Friedrich Merz leading a new coalition government. The administration has signaled a shift toward “de-risking” economic relations with China, aiming to reduce strategic dependencies while maintaining strong commercial links. This approach marks a departure from the more protective stance of previous governments, emphasizing resilience and diversification over outright decoupling.
Merz’s government has made it clear that future trade relationships should prioritize markets perceived as stable and secure, such as the United States and Latin America. The new coalition agreement commits to enhancing economic security and tightening investment screening, particularly in sectors deemed critical to national interests. German companies have been urged to manage their China operations more independently, with the government indicating it will not intervene to support firms facing losses from risky investments.
Despite these policy shifts, the economic interdependence between Germany and China remains substantial. The government’s strategy is best described as managed interdependence, balancing the need for resilience and strategic selectivity with the realities of global supply chains and market access. In sectors like clean technology, collaboration with Chinese partners continues to offer significant benefits, even as calls for greater protection of domestic industries grow louder within Germany.
Business Leaders and the Future of Sino-German Relations:
The planned visit by Chancellor Merz and his business delegation is seen as a crucial step in dealing with the complexities of the current global environment. German industry leaders are keen to maintain access to the vast Chinese market, while also adapting to new regulatory and geopolitical realities. The automotive, machinery, and chemical sectors, in particular, view the trip as an opportunity to deepen partnerships and explore new avenues for growth.
At the same time, both governments are under pressure to address contentious issues such as market access, intellectual property protection, and fair competition. The rise of Chinese competitors in key industries has prompted German firms to accelerate innovation and localize operations in China. Meanwhile, the German government is working to align its China policy with broader EU efforts, seeking greater unity on issues ranging from trade to climate cooperation.
The upcoming visit is also expected to feature discussions on global challenges, including climate change and regional security. Both Merz and Chinese President Xi Jinping have identified climate cooperation as a potential stabilizing force in the bilateral relationship. As Germany and China face economic slowdowns and rising competition, the ability to find common ground on shared challenges will be critical to sustaining their partnership.
Chancellor Merz’s planned trip to China with a high-level business delegation highlights the enduring importance of Sino-German relations. As both countries recalibrate their strategies in a rapidly changing world, the visit will serve as a barometer for the future direction of one of the world’s most significant economic partnerships.
