Why Germany's Merz needs to hedge his bets with China and US
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Rather than choosing between confrontation and capitulation, Merz is likely to pursue a third path – one that recalibrates Sino-German ties to safeguard national security while ensuring Germany's industry remains competitive in an era of global uncertainty.
Merz's political philosophy is rooted in economic pragmatism. His background, spanning corporate law, boardroom negotiations and business management, has shaped his belief that Germany's global economic position is best secured through a free-market approach. His policy agenda reflects this view: lower taxes, fewer regulations and pro-business reforms designed to make German industry more competitive on the global stage.
A central pillar of this strategy is ensuring that Germany remains a leading player in global supply chains. China plays a crucial role in this regard. With bilateral trade reaching €246.3 billion (US$258.2 billion) in 2024, China remains one of Germany's most important economic partners. Any move to isolate Beijing would disrupt production networks, weaken exports and further strain
Germany's stagnating economy
It explains why, despite his campaign rhetoric, Merz's actual approach to China is likely to be far more measured. While he has publicly warned German businesses against over-reliance on China and described Beijing as part of an 'axis of autocracies', these statements should be understood within the broader context of election posturing.
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His record suggests that his focus will be on mitigating risks without severing economic ties: an approach that is supposed to ensure German businesses can compete effectively without exposing themselves to unnecessary vulnerabilities.
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This article was originally published by the Organization for Research on China and Asia (ORCA) and is republished here with permission.
