Friedrich Merz touched down in Beijing on Wednesday for his first visit to China as German chancellor, bringing roughly 30 of Germany's most prominent industry executives and a set of economic grievances that have been building for years. The two-day trip takes in meetings with President Xi Jinping and Premier Li Qiang, a stop at a Mercedes-Benz electric vehicle facility, and a visit to Hangzhou, the tech hub home to Alibaba and robotics developer Unitree. It is the kind of itinerary that chancellors have made before. What's different this time is the shape of the relationship they're walking into.

China reclaimed its position as Germany's largest single trading partner in 2025, with bilateral trade reaching 251.8 billion euros — up 2.2 percent from 2024, when the United States had briefly taken the top spot. That headline figure sounds stable. The details underneath it are not.

A Trade Relationship That Has Flipped

For most of the past decade, Germany ran trade surpluses with China. German machinery, chemicals, cars, and industrial equipment fed China's economic ascent, and both sides benefited. That era is over.

Germany's trade deficit with China hit a record approximately 90 billion euros in 2025 — a figure that represents an increase of roughly 30 billion euros from the year before. German exports to China fell 9.7 percent last year to 81.3 billion euros. German imports from China, meanwhile, rose 8.8 percent to 170.6 billion euros. Chinese manufacturers, helped by state subsidies and what German officials describe as an undervalued currency, have reversed the direction of the relationship.

The automotive sector illustrates the shift most sharply. German carmakers, including Volkswagen, BMW, and Mercedes-Benz — all of whom sent their chief executives on the trip with Merz — built their position in China over decades. The transition to electric vehicles has upended that. Most major German electric cars are priced out of reach for the average Chinese consumer, while Chinese manufacturers export increasingly competitive vehicles back into Europe at prices German producers cannot match.

Chinese export controls on rare earths have added another layer of pressure. China controls more than 90 percent of the world's processed rare earths, which are used in electric car batteries, microchips, weapons systems, and wind turbines. Restrictions Beijing imposed last year caused temporary production stoppages at German manufacturers. Merz's industry delegation has urged him to raise those controls directly with Chinese leaders.

"Our companies are coming under increasing pressure because key competitive conditions are being systematically distorted," said Thilo Brodtmann, managing director of VDMA, the German mechanical engineering association, ahead of the trip. German machinery exports to China fell 8.5 percent in the first 11 months of last year. Machinery imports from China rose 12.5 percent in the same period.

Why Merz Is Still Going

The obvious question is why a German chancellor would travel to Beijing to deepen ties with a country running a 90 billion euro surplus against it. The answer is that the available alternatives are limited.

The United States, under President Donald Trump, has imposed tariffs that German officials have described as a direct challenge to their export economy. German exports to the U.S. fell 9.3 percent in 2025. In the automotive sector alone, shipments to the American market dropped 17.5 percent. German Economic Minister Katherina Reiche said publicly that "the world has become more uncertain, and alliances that we have trusted and relied on are beginning to crumble."

That context shapes what Merz is doing in Beijing. Decoupling from China, he said before departing Berlin, would be "shooting ourselves in the foot." He repeated the phrase more than once in the days leading up to the trip.

BMW's chief executive Oliver Zipse, part of the delegation, framed it similarly: "Those who close their minds to China's enormous market and innovation potential are missing out on great opportunities for global growth and economic success."

At the same time, German foreign direct investment in China rose to over 7 billion euros in 2025 — up from roughly 4.5 billion euros the previous year — with major commitments from BASF, Bayer, Bosch, and Siemens. A German chamber of commerce survey found that 93 percent of German firms operating in China intend to maintain or expand their presence there.

What Merz Plans to Raise

The visit is not purely transactional. Merz has been publicly critical of China's relationship with Russia, and he is expected to press Xi on the subject.

"If Xi Jinping said tomorrow: 'Stop it' — then it would stop the day after tomorrow," Merz told reporters before leaving Berlin, in reference to the war in Ukraine. China's foreign ministry responded Tuesday that the Ukraine conflict "is not and should not become an issue between China and Europe."

Merz has also made clear his government holds no illusions about Beijing's broader ambitions. At the Munich Security Conference earlier this month, he said China was "systematically exploiting the dependencies of others, reinterpreting the international order on its own terms" and that Beijing "could draw level with the US in terms of military might" in the foreseeable future. He said China's claim to Taiwan and its expansion in the South China Sea were matters of direct European concern.

He has also signaled that Germany still follows the one-China policy but will "determine the precise details ourselves" — language noted in Beijing, particularly given that it came just days before his departure.

The Broader Pattern

Merz is not alone in making this trip. French President Emmanuel Macron visited China in December. British Prime Minister Keir Starmer went in January with more than 50 business representatives. Canadian Prime Minister Mark Carney made his own visit. Trump is expected in Beijing in late March. The parade of Western leaders to Xi's door reflects a common problem: each country needs China economically, distrusts it strategically, and cannot afford to do nothing.

Germany's position is more acute than most. Its manufacturing base — still the core of its economy — was built on a business model that depended on the Chinese market for growth and Chinese factories for supply. Both sides of that model are now under stress simultaneously.

Jörg Wuttke, who represented BASF in China for more than two decades and briefed Merz ahead of the trip, described the shift in blunt terms: "We are experiencing a brutal withdrawal." The complementary relationship that defined Germany-China trade for two decades, he said, no longer exists.

Merz's five-point framework for the relationship — European strength, a common EU approach, fair competition, de-risking rather than decoupling, and international cooperation — amounts to a statement of principles more than an action plan. Whether China takes any of it seriously will depend on whether Berlin is prepared to use the leverage it has. Germany's weight within the EU gives it real tools, including the credible threat of coordinated European tariffs or trade restrictions.