Germany and China: Big challenges, new opportunities

DW News · Feb 23, 2026 · Collected from RSS

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There is no shortage of gloomy assessments of the global situation at the moment. "In the era of great powers, our freedom is no longer a given. It is under threat," said German Chancellor Friedrich Merz at the opening of the Munich Security Conference. And he explicitly mentioned China: "China has the ambition to shape global affairs, laying the foundations for this over many years with strategic patience. In the foreseeable future, Beijing could draw level with the US in terms of military might. China is systematically exploiting the dependencies of others, reinterpreting the international order on its own terms," Merz said. The Chancellor no longer sees the US as a reliable partner. In Munich, Chinese Foreign Minister Wang Yi offered the very things that the German government now feels are lacking in Donald Trump's America: multilateralism, a rules-based world order and free trade. In this, Merz seems to see an opportunity.How China is playing its geopolitical cards in the Trump eraTo view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video Shortly before the start of his trip, Merz announced that he would be discussing "strategic partnerships" in Beijing. But how promising is China's offer? "Not everything China wants is automatically in Germany's interests. That will have to be discussed and negotiated,” Eberhard Sandschneider, a China expert at the Free University of Berlin, told DW.The old business model no longer works A large business delegation is travelling with Merz China is Germany's most important trading partner, with a volume of over €250 billion ($294 billion) in 2025. Last year, China surpassed the US once again, which had briefly taken the lead. But trade with China has changed significantly. Germany's trade deficit reached a record high in 2025, amounting to around €90 billion according to estimates by the German Economic Institute. This represents an increase of €30 billion over the previous year alone. In a recent government statement to the Bundestag, Merz spoke of a "growth gap" with China and emphasized that Germany must become more competitive. Until a few years ago, for example, the German automotive industry was very successful in serving the Chinese market. However, since the transition to electric cars in both countries, the old business model is no longer viable: most large German electric cars are too expensive in China, while China exports incomparably cheaper vehicles to Europe. "We have been resting on our laurels for too long," says Sandschneider. "We Germans are proud that we build cars and not mobile phones on wheels, as an automotive manager once said. But that is exactly what the Chinese are building, and that is exactly what makes them successful." China has now become "a technological leader," he added. "Keeping up with that will not be easy."Wadephul: 'We want to be reliable trading partners'To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video Rare earths leave Germany heavily dependent The previous federal government under Chancellor Olaf Scholz had already decided to reduce dependence on China. China has a near-global monopoly on some raw materials, especially rare earths, which are needed for electric cars, for example. China's export restrictions on rare earths even led to temporary production stoppages at German car manufacturers in 2025. In addition, experts see security risks posed by Chinese access to data, for example, via communication networks. The US government has also warned against such dependencies. In Munich, Secretary of State Marco Rubio called on European allies to rally behind the US. Eberhard Sandschneider sees dangers in the development of a bipolar world in which Washington could demand that Germany choose between the US and China. "That puts other countries, not just Germany, in a difficult bind." Merz's first visit is long overdue During his visit to China, Friedrich Merz plans to call on President Xi Jinping to stop supporting Russia's war in Ukraine. Eberhard Sandschneider believes this is futile: "Anyone who has failed to understand that China's geostrategic interest consists in not losing Russia would do well to sit down and think things through. The German chancellor, whose visit to China is anyway long overdue, will not succeed in this." The fact is that Merz's inaugural visit is late in the game, in two senses: late after taking office in May 2025, having previously visited a whole series of other countries, including India. But also late because other Western heads of state and government have already been to China in recent months: French President Emmanuel Macron, British Prime Minister Keir Starmer and Canadian Prime Minister Mark Carney, for example. They all had the same goal that Merz is now pursuing: to gain new economic policy leeway with China's help, which the US had previously restricted.How China outsmarted Europe and the US on rare earthsTo view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video Merz actually wanted to come in October. But there were diplomatic tensions: Foreign Minister Johann Wadephul had accused China of aggression in the Pacific region and then canceled his visit on short notice when it became clear that no important dialogue partners would be made available to him other than his counterpart Wang Yi. The cancellation was very poorly received in Beijing. But Merz has not minced his words either: "Suddenly we see China aggressively expanding bases in the South China Sea, encircling Taiwan and openly declaring that it would be prepared, if necessary, to use military force to bring about the so-called reunification of China," he said recently, referring to Taiwan, which Beijing considers a renegade province. This came just a few days before his departure for China. It will be interesting to see whether his criticism will cast a shadow over the visit. This article was originally written in German. While you're here: Every Tuesday, DW editors round up what is happening in German politics and society. You can sign up here for the weekly email newsletter, Berlin Briefing.