The speech came at an Ash Wednesday rally in Trier, but the message was aimed at two capitals. Chancellor Friedrich Merz told the crowd that Germany’s foreign and economic policies could no longer be separated, that Washington’s tariff campaign was not Berlin’s policy, and that Europeans would fight back if pushed further.
Days later, he flies to Beijing with a senior business delegation for his first China visit since taking office — a trip that comes after German money has already made its preferences clear.
Data from the German Economic Institute, drawn from Bundesbank figures and reported by Reuters in January, showed German corporate investment in China climbed to over €7 billion ($8 billion) between January and November 2025 — a 55.5% surge from €4.5 billion the prior year, reaching a four-year high. Meanwhile, German exports to the United States plunged 9.3% for the full year to €146.9 billion, and total bilateral trade with Washington fell 4.4% to €241.6 billion.
The trade reversal
China reclaimed the title of Germany’s largest trading partner in 2025 after a single year in which the U.S. held the top spot. Destatis data showed bilateral trade with China totaled €253 billion ($299 billion), up 2.7%. Imports from China rose to €171.2 billion, driven by EVs, batteries, and renewables equipment that Europe’s green transition demands but cannot yet produce at scale.
Exports to China fell to €81.8 billion, widening a deficit critics flag as dependency. But the structural picture is that German automakers are localizing production inside China to survive domestic EV competitors. Volkswagen, BMW, and Mercedes-Benz invested billions in Chinese plants, and the auto sector drove 73% of German FDI in China in 2024.
A stagnating economy makes the choice
Germany’s economy grew just 0.2% in 2025 after two straight years of contraction. Industrial output hit its lowest since May 2020, business insolvencies reached a decade high, and manufacturing shed jobs while the export machine sputtered. Telling CEOs to diversify away from China is one thing; getting them to do it when the U.S. market is shrinking under tariffs and China still offers scale is another.
Merz met Chinese Foreign Minister Wang Yi at the Munich Security Conference on February 14. Wang invited Germany to bring the relationship to a “new level.” Merz responded that Germany “opposes protectionism” and “encourages companies to increase investment in China.” The script writes itself when the numbers already have. This is part of The Rio Times’ daily coverage of global affairs and Latin American financial news.
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This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error · Editorial responsibility: Matthias Camenzind, Editor-in-Chief
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