German deficit with China widens sharply
German Chancellor Friedrich Merz called for a recalibration of trade ties with China following talks with President Xi Jinping in Beijing, pointing to Germany’s growing trade imbalance.
Germany’s trade deficit with China reached €90 billion in 2025. Merz said the widening gap, which has expanded significantly in recent years, reflects structural imbalances and excess industrial capacity in China.
“We have had a considerable imbalance in the trade balance for about two years,” Merz said after the meeting. “We want to reduce these imbalances, which have arisen primarily from overcapacity in China.”
Pressure from German industry
The visit comes amid rising concern among German manufacturers, who attribute ongoing job losses to what they describe as unfair competitive practices. Germany’s manufacturing sector is currently shedding roughly 10,000 jobs per month.
Business leaders have urged Berlin to adopt a firmer approach toward Chinese industrial policies, including state subsidies, pricing strategies and currency management that they argue distort competition.
Merz echoed those concerns in his remarks. “Competition between companies must be fair,” he said. “We need transparency, we need reliability, and we also need compliance with jointly established rules.”
He noted that Germany’s trade deficit with China has quadrupled since 2020, calling the trend “unhealthy” and emphasizing the need to address it through dialogue and structural adjustments.
Economic cooperation remains central
Despite the tough rhetoric, Merz highlighted areas of ongoing cooperation. Chinese officials indicated plans to order up to 120 aircraft from Airbus, signaling continued commercial engagement between the two economies.
The chancellor traveled with a delegation of around 30 senior German executives, underscoring the economic significance of the visit. Additional business agreements are expected to be finalized in the coming months.
Geopolitical dimension
Merz also raised security concerns during his talks, urging China to leverage its influence with Russia regarding the war in Ukraine. He called for an end to exports of dual-use goods that could support Moscow’s military operations.
“We also know that signals from China are taken very seriously in Moscow,” Merz said. “This applies to words as well as deeds.”