Chancellor Merz Navigates Delicate Trade Diplomacy in Inaugural Beijing Visit

German Chancellor Friedrich Merz meets Premier Li Qiang in Beijing, calling for a rebalance of trade as German imports from China more than double exports.

By: AXL Media

Published: Feb 26, 2026, 3:52 AM EST

Source: Information for this report was sourced from Politico

Addressing a Ballooning Bilateral Trade Deficit

The central focus of the visit is the widening trade gap between the two nations, which saw German imports from China reach 170.6 billion euros in 2025, more than double the 81.3 billion euros in exports. Merz expressed "very specific concerns" regarding this imbalance, which has been exacerbated by a "China shock" of manufacturing overcapacity flooding European markets with inexpensive goods. Accompanied by a delegation of 30 business executives, including the CEOs of Volkswagen and BMW, the Chancellor is under intense domestic pressure to secure better market access for German firms and address distortions in competition.

Calls for Multilateralism Amid Transatlantic Shifts

During the meetings at the Great Hall of the People, Premier Li Qiang called on Germany to join China in safeguarding multilateralism and free trade. This message is widely interpreted as a response to the protectionist trade policies of U.S. President Donald Trump, whose tariffs have contributed to a 5 percent drop in German trade with the United States. While Li portrayed China as a stabilizing force in an uncertain world, Merz signaled wariness about Beijing’s vision for a new multilateral order, asserting that Europe must learn the "language of power politics" to protect its own economic and military interests.

Transformative Analysis: De-Risking vs. Decoupling

The Chancellor’s rhetoric in Beijing signals a strategic shift from the era of optimistic engagement to a more assertive policy of "de-risking". Merz has publicly stated that while a total decoupling from the Chinese market would be "shooting ourselves in the foot," Germany must reduce its strategic dependencies, particularly for critical products like rare earths used in the tech and defense industries. This visit serves as a litmus test for Merz’s ability to maintain vital economic ties while moving toward reciprocity, especially as industry groups warn that China's dominance in supply chains gives it unprecedented leverage over German factories.