Still Muddling Through

The German chancellery was long notorious for blocking tougher China policies proposed by Berlin’s ministries, but this seemed to be changing under Friedrich Merz in the last year. The chancellor, some argued, understood the challenge China poses even if Berlin’s inconsistent and uncertain policy toward Beijing remained. Accordingly, ahead of his recent visit to Beijing, advocates for a tougher approach expressed cautious optimism.  

Compared with visits by Mark Carney or Keir Starmer, his Canadian and British counterparts, Merz’s was less of an unambiguous victory for the hosts. China can point to visuals of top foreign officials lining up to meet its leader, Xi Jinping. But more importantly, the chancellor’s trip suggests that Germany will continue to try to muddle through on its policy toward Beijing by avoiding decisive action. 

Merz’s statements and actions during his travels underscore the gap between rhetoric and practice. Germany officially wants to de-risk from China and talks about diversification, resilience, and the reduction of critical dependencies. In practice, economic entanglement with China is deepening, including in emerging strategic sectors required for Germany’s energy transition.  

German and European anxiety about a changing US course leading to a Sino-American deal to Europe’s detriment is one reason for the gap. Even small shifts in Washington’s policies create uncertainty in Berlin. Delayed weapons sales to Taiwan, despite Congressional authorization, ahead of a Trump visit to Beijing this spring exacerbate concerns.  

But Berlin, regardless of the president’s actions, cannot afford to evade a tougher approach to China. Germany has been hit harder than most by the second China shock because its economic model made it especially vulnerable to Beijing’s competition. Chinese overcapacities have hit Germany’s core industries, and the country is feeling the effects of mass layoffs and shuttered factories.  

Merz, of course, raised German concerns, including subsidies, currency policy, and access to critical raw materials. But Beijing will not change an export-driven model that it views as essential for sustaining growth when deep structural problems have slowed its economy. It will certainly not do so because Germany asks politely. 

Berlin does have leverage but only through the EU. Coordinated use of European trade defense instruments could alter China’s cost-benefit calculations. Unfortunately, Germany has previously acted as a brake on resolute European action, such as when it lobbied against tariffs on Chinese electric vehicles in 2024. 

Beijing hopes that Berlin’s role stifling such measures will continue. It is no accident that the Global Times, a Chinese Communist Party tabloid, in its reporting on the Merz visit, referred to the relationship between the two capitals as “a ‘stabilizing anchor’ for China-EU ties”. Beijing’s expectation is that Germany will enjoy smooth bilateral ties in exchange for continuing to quietly soften more hawkish EU positions. The chancellor’s trip, unfortunately, reinforces Beijing’s perception that it can continue to divide and conquer Europe in this way. 

Unlike France, which has advocated for and practiced European unity on China by including the European Commission in its meetings with Xi, German officials’ talks with their Chinese counterparts are held without representation from Brussels. This has never been a smart approach, but it works less in Germany’s interest now that the country is no longer seen in Beijing as a big player. Instead, it is perceived as economically weak, a nation begging China to change its economic course and stop its support of Russia’s war in Ukraine. As long as Germany continues its cautious, bilateral approach, Beijing will pursue fragmenting Europe. 

Germany must decide if it should hedge further in the hope that economic pragmatism will soften geopolitical realities or match its de-risking rhetoric with meaningful action. A more resolute China policy must not be proclaimed in Beijing. But it must be implemented, and by Europe collectively. For Germany, that means working through the EU. Waffling without a coherent European framework is a recipe for more vulnerability and diminishing leverage with China. 

The views expressed herein are those solely of the author(s). GMF as an institution does not take positions.