News analysis
German Chancellor Friedrich Merz traveled to Beijing from Feb. 25 to 26 for his first official visit to China, leading a delegation of executives from 30 major German companies, including BMW, Volkswagen and Siemens. The trip produced a modest set of agreements but underscored the economic and geopolitical balancing act facing Berlin as it grapples with trade turbulence and shifting alliances.
During meetings with Chinese leader Xi Jinping and Premier Li Qiang, the two sides signed five agreements covering climate and green transition cooperation, the resumption of German pork exports suspended since 2020 due to African swine fever, a new poultry export protocol, and sports exchanges in football and table tennis.
Xi also informed Merz of a new Chinese order to purchase up to 120 commercial aircraft from Airbus — a signal development for Europe’s aerospace champion and a potential boost for Germany’s export-driven economy. While Canada and the United Kingdom signed more documents during their leaders’ recent visits to Beijing, Germany’s agreements were viewed as more directly tied to industrial output and manufacturing.
Yet the visit stopped short of major breakthroughs, reflecting the persistence of structural tensions in the Sino-German relationship.
Trade pressures at home and abroad
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Merz arrived in Beijing at a moment of strain for Germany’s export model. U.S. President Donald Trump has imposed sweeping global tariffs during his second term, with automobiles and related components — long a pillar of German exports — particularly hard hit. German auto exports to the United States fell 17.8 percent in 2025.
At the same time, Berlin faces what some policymakers have called a “second China shock.” Germany’s trade deficit with the People’s Republic of China (PRC) widened by a third last year to a record 89.3 billion euros, while exports to China declined 9.7 percent to 81.3 billion euros.
After meeting Xi, Merz acknowledged that “we have had a considerable imbalance in the trade balance for about two years,” adding that the trade dynamic was “unhealthy” and driven largely by “overcapacity in China.” He said Germany is seeking ways to reduce the deficit. At a business forum attended by German and Chinese executives, however, he also struck a pragmatic note: “We want Chinese investment in Germany.”
Merz further urged Beijing to “use their influence” to pressure Russia to end the war in Ukraine — a reminder that political differences persist alongside economic cooperation.
According to SinoInsider, a New York-based risk consultancy specializing in elite Chinese politics, the limited scope of agreements reflects “practical caution on both sides.” While Xi emphasized a “success story” of mutual benefit and urged Berlin to remain “positive and pragmatic” about Sino-German ties, Merz had to navigate domestic concerns about economic dependency and security risks.
Political sensitivities in Germany and across the West limit how far Berlin can deepen economic integration, particularly in sectors with national security implications, the analysts wrote in a March 2 newsletter entry. At the same time, Germany’s economic exposure to China constrains how forcefully it can push back should the two diverge on matters of geopolitical interests or ideology.
Strategic autonomy and hedging
Merz’s trip also unfolded against a broader recalibration among U.S. allies. Trump’s tariffs on American allies, scathing criticism of Europe, and calls for a more transactional security relationship have prompted renewed debate in European capitals about strategic autonomy.
SinoInsider assesses that “like Canada’s Mark Carney and Britain’s Keir Starmer, Friedrich Merz was partly looking to hedge against the U.S. and Donald Trump by strengthening Germany’s ties with the PRC.”
Germany’s openness to Chinese investment, framed around reciprocity and fairness, provides China with outlets for industrial overcapacity and signals that Berlin is looking for a diversity of economic partners, rather than throwing in its lot with the United States.
Such hedging, the consultancy argues, could weaken Washington’s leverage if the United States seeks to coordinate a harder line against China. If Germany and the European Union do not align tariff policies with the U.S., Beijing may conclude that the Western camp can be divided through market incentives.
Still, Berlin’s engagement is far from unconditional. European institutions continue to investigate PRC electric vehicle subsidies — the Chinese auto industry is a key competitor with European brands — and concerns about supply chain dependence remain high.
Beijing’s calculus
From Beijing’s perspective, the visit offered tangible and symbolic gains. Though still subject to review and procedural details, the Airbus purchase reinforces Europe’s role in China’s aviation market and comes ahead of Trump’s planned China trip at the end of March, where purchases of American aircraft are expected to feature prominently in the talks.
SinoInsider suggests that by signaling large orders from Airbus and reopening agricultural channels with countries such as Germany, Canada and the UK, Beijing may be reducing the marginal leverage Washington hopes to extract through export deals.
The optics also matter. Official Chinese media highlighted joint support for the United Nations and opposition to protectionism. SinoInsider notes that such language strengthens Beijing’s narrative of defending multilateralism, particularly when echoed by major European powers.
At the same time, the consultancy cautions that uncertainties remain between the announced procrurements and final implementation, pointing to China’s past record in trade negotiations.
For Berlin, the visit was less about dramatic shifts than economic stabilization. With populist parties rising at home and manufacturing sentiment fragile, securing market access and high-profile orders carries political weight.
The broader strategic tensions between China and the West — over governance models, security concerns and technological rivalry — remain unresolved. Short-term economic accommodations are unlikely to erase long-term structural frictions.
Leo Timm contributed to this report.
