German Trade Minister Katherina Reiche is in Beijing from Monday to Friday, aiming to deepen economic cooperation with China even as a growing number of EU member states urge Brussels to adopt a more confrontational approach toward the Asian giant. The visit comes just two days after France, Spain, Italy, the Netherlands, and Lithuania issued a non-paper calling for EU action against Chinese overcapacity and unfair trade practices—a document Berlin conspicuously did not sign.
Germany remains the principal bottleneck in the EU's evolving China strategy. While the European Commission has sharpened its trade defence tools in response to mounting concerns, Berlin continues to prioritise dialogue and partnership. In March, Chancellor Friedrich Merz floated the idea of a trade agreement with Beijing, a proposal that Brussels quickly dismissed. “There are a number of concerns and real challenges that the European Union has consistently expressed to China that we need to see them meaningfully address before we can even talk about any future agreements,” said Olof Gill, the Commission’s deputy chief spokesperson, at the time.
A deepening trade deficit
Germany’s trade deficit with China reached a record €87 billion in 2025, yet Berlin remains reluctant to confront its largest trading partner. Bilateral trade volume stood at €250 billion last year, with some 5,200 German companies operating in China—particularly in automotive, mechanical engineering, and electrical industries. These sectors are increasingly under pressure from Chinese competitors that benefit from extensive state subsidies.
According to a May report by the Centre for European Reform, the growing concentration of global car, machinery, and chemicals production in China could weaken innovation in traditional manufacturing hubs and increase Beijing’s leverage over Berlin through the threat of supply disruptions, similar to its 2025 blockade of rare earth exports. The report also warns that demand generated by Germany’s fiscal stimulus after easing its debt brake could end up boosting Chinese imports rather than supporting domestic industry.
German exports to China fell by 9.7% year-on-year, while imports of Chinese goods—including electronics, electric vehicles, and components—rose by 8.8%. This imbalance underscores the structural challenges facing German industry, which is heavily reliant on the Chinese market even as it faces growing competition from state-backed Chinese firms.
Reiche’s mission: cooperation over confrontation
Reiche’s agenda includes political talks, a business forum, and visits to local companies, accompanied by a delegation of around 40 German firms. Discussions will also focus on energy technologies. “We hope the visit will help to transfer the insights gained on the ground into the political discussion in Berlin and to further develop bilateral exchange,” said Oliver Oehms, Executive Director of the German Chamber of Commerce in China.
A chamber survey published in May found that 51% of German companies in China support policies favouring partnerships with Chinese firms, while 42% back the “strategic” use of knowledge gained through such collaborations. Yet these partnerships come with risks, as Chinese competitors increasingly dominate key sectors through state subsidies and industrial policy.
The EU’s broader concerns about critical dependence on China in five industrial sectors remain unresolved. Germany’s reluctance to endorse a tougher EU stance reflects its deep economic entanglement with Beijing, but also exposes the continent to vulnerabilities that other member states are eager to address.
As the EU debates its future trade strategy, Berlin’s approach—balancing cooperation with competition—will be crucial. For now, Reiche’s visit signals that Germany is not ready to shift course, even as its trade deficit widens and pressure from European partners mounts.
