Germany, China, and the EU: From Deep Interdependence to Managed Strategic Friction

Germany’s relationship with China is undergoing a profound transformation. For decades, Berlin treated China primarily as an engine of opportunity: a market for German exporters, a production base for global firms, and a pillar of industrial profitability. That approach was rooted in a broader German strategic culture often summarized as “Wandel durch Handel”—the belief that trade and interdependence could moderate political differences and, over time, encourage convergence. Today, that paradigm is giving way to a much less optimistic model. Germany still seeks to preserve economic ties with China, but it is increasingly attempting to do so under the logic of de-risking: reducing strategic vulnerabilities while continuing selective engagement. This shift mirrors the broader EU approach, which defines China simultaneously as a partner, competitor, and systemic rival.

The catalyst for this change has not been a single event, but an accumulation of pressures. At the EU level, the relationship with China is officially described as “critically unbalanced,” with Brussels emphasizing asymmetrical market openness, systemic distortions caused by Chinese industrial policy, and a widening deficit in goods trade. The European Commission states that the European Union goods trade with China reached 732 billion Euros in 2024, and that the EU’s goods trade deficit with China increased again in 2025, reaching 359 billion Euros, while European Union exports to China fell and imports from China rose. The European Union’s official position is that reciprocity, a level playing field, and the correction of asymmetries are now central policy priorities.

Germany’s own evolution reflects this wider European reassessment, but with important national nuances. Under Angela Merkel, Berlin was generally the leading advocate of pragmatic engagement with Beijing. Under later governments, especially after the publication of Germany’s first China Strategy in 2023, Berlin moved closer to the European Union’s de-risking language, emphasizing competition, dependency reduction, and strategic caution without endorsing full decoupling. Analysts have noted that Germany’s official rhetoric has shifted from “win-win” partnership toward a more sober understanding of rivalry and asymmetry, even though influential business constituencies continue to defend strong economic ties. In that sense, Germany has not abandoned engagement with China; it has redefined engagement as something to be managed, hedged, and politically conditioned.

This strategic transition was highly visible in the recent visit of Economy Minister Katherina Reiche to China in late May 2026. Reporting indicates that Reiche traveled with a substantial business delegation that included senior executives from BASF, Thyssenkrupp, and Siemens Energy, underscoring how central large industrial firms remain to Germany’s China policy. The visit focused on cooperation, industrial dialogue, and German commercial interests, but it also highlighted concerns about worsening trade imbalance, fair competition, and access to critical raw materials. Reiche publicly stressed that German firms were not afraid of competition, but that competition had to be organized fairly, while discussions in Beijing also touched on rare earths and reliable supply channels. This encapsulates the new German formula: preserve engagement, but couple it with sharper demands for reciprocity and resilience.

Yet Germany’s room for maneuver is structurally constrained by the European Union. The EU’s common commercial policy is an exclusive competence, meaning that trade agreements, tariff policy, and the legal architecture of external trade relations are negotiated by the European Commission, not individual member states. Official EU and national government sources are explicit that the Commission negotiates trade arrangements on behalf of member states and that the EU “speaks as one” in commerce. Germany therefore cannot independently conclude tariff deals or market-access agreements with China, even if it wishes to. What Germany can do is use bilateral diplomacy, ministerial visits, and business promotion to shape the political climate around EU-China relations and to influence Brussels from within. In other words, Berlin has considerable political and economic influence, but not legal sovereignty over trade policy toward China.

This distinction explains why Germany matters so much in Brussels. The EU’s China policy is not a unitary line but a continuously negotiated compromise among member states and EU institutions. Germany traditionally represents the camp of economically pragmatic states that prefer dialogue and fear escalation, especially because German industry is deeply exposed to the Chinese market. Other states—most notably France, and often Italy, Spain, and some northern and eastern members—have more strongly emphasized defensive trade tools, industrial protection, and strategic autonomy. This tension is visible in contemporary reporting: while several member states have urged the EU to take a tougher stance against Chinese overcapacity and unfair trade practices, Germany has often counseled caution and prioritized market access for its own industrial sectors. The result is an EU policy that is neither fully accommodationist nor fully confrontational, but a negotiated middle ground.

This is also why comparisons with Japan are useful—but only up to a point. Over the past 10 to 15 years, Japan and China have maintained deep economic interdependence despite severe political and security tensions. Analysts have described Sino-Japanese relations as a state of “stable instability”: robust trade and supply-chain links coexist with sustained diplomatic mistrust. Recent commentary and policy analysis note that high-level political contact between Tokyo and Beijing had long been limited even while economic ties endured. Germany is not consciously copying that model, but it is moving toward a structurally similar condition: tighter economic interdependence combined with growing strategic distrust. The difference is that Germany, unlike Japan, is still actively trying to maintain political dialogue as a stabilizing mechanism rather than accepting a semi-frozen political relationship as normal.

Whether China is willing to accept this emerging European model is another crucial question. The evidence suggests that Beijing can tolerate political tension alongside economic cooperation—but only within limits. In the case of Japan, deep economic ties survived long periods of strained politics, yet China also demonstrated that it could use economic levers in response to what it considers unacceptable political moves. In the European case, China has sharply criticized EU measures such as the Foreign Subsidies Regulation as discriminatory and has framed Brussels’ anti-subsidy instruments as unfair barriers targeting Chinese firms. At the same time, China continues to engage the EU through high-level dialogue, technical working groups, and proposals for negotiated solutions such as minimum-price arrangements in the electric-vehicle dispute. The pattern is clear: Beijing prefers to preserve market access and commercial ties, but it increasingly treats economics and politics as linked rather than separable.

That dynamic is especially important for Germany, because from China’s perspective Berlin is not just another European capital. Germany is the EU’s largest economy, one of China’s most important economic partners in Europe, and frequently a moderating voice in internal EU debates. This gives Germany strategic value to Beijing. China has every incentive to keep Germany engaged, to encourage German firms to remain invested in China, and to reinforce voices in Berlin that argue against a hard-line or highly securitized EU policy. In that sense, China’s preferred strategy is not necessarily to defeat the EU in open confrontation, but to prevent the EU from consolidating into a fully unified, assertive actor on trade and economic security. Germany is central to that equation.

What, then, are the likely “achievements” of ministerial visits such as Reiche’s? They should not be misunderstood as legally binding breakthroughs. Because Germany cannot renegotiate the core rules of EU-China trade, such visits tend to yield political understandings, economic signaling, business facilitation, and channels for future dialogue rather than treaty-level commitments. Their results are therefore real but soft. They can help preserve access, reassure firms, and create momentum for sectoral cooperation, yet they remain dependent on political follow-through in Berlin, Beijing, and Brussels. If Germany’s policy direction hardens, or if EU-China trade conflict deepens, the practical effects of such visits can dissipate quickly.

This is why a hypothetical change of Chancellor would matter—not because it would automatically cancel the outcomes of a ministerial visit, but because it would influence whether those outcomes are pursued energetically, cautiously, or not at all. German policy toward China is increasingly defined by coalition politics and by the balance between business interests and strategic concerns. Across the mainstream political spectrum, there is now a broad consensus that Germany must reduce vulnerabilities in the China relationship, even if parties differ over speed, tone, and scope. A more security-minded or Green-influenced government would likely push harder on de-risking and dependency reduction; a more conservative but business-aware coalition might preserve engagement while demanding stricter reciprocity; a continuity-oriented government might implement outcomes more gradually. In all cases, the long-term trend points away from the old partnership logic and toward managed, conditional engagement.

Conclusion

Germany is not decoupling from China, but neither is it returning to the old “change through trade” paradigm. It is moving into a new phase best described as managed strategic friction: preserving economic ties where useful, demanding fairer conditions where possible, reducing dependence where necessary, and trying to keep political dialogue alive even as structural distrust grows. Within the EU, Germany remains highly influential but legally constrained; it can shape, soften, and sometimes slow European policy, but it cannot unilaterally rewrite it. For China, Germany remains the most important national interlocutor in Europe, yet Berlin’s leverage is gradually being absorbed into a tougher and more geopolitically conscious EU framework. The future of Germany-China relations will therefore depend not on any single visit or leader, but on whether all three actors—Berlin, Brussels, and Beijing—can sustain a workable equilibrium between commerce and strategic rivalry in a world where both are becoming increasingly difficult to separate.