Germany’s Merz hails China ties as he seeks reset with Beijing

German Chancellor Friedrich Merz urged Chinese firms on Wednesday to step up investment in Germany but also called on Beijing to reduce market distortions as he began a visit aimed at resetting relations between the world’s second- and third-largest economies. On his first visit to China as Chancellor, Merz, who was accompanied by a large business delegation, told President Xi Jinping that he wanted to deepen economic ties with China, Germany’s largest trading partner last year. “There are challenges, which we should talk about today, but the framework in which we operate is exceptionally good and we have worked together very well over the past decades,” he said.

Xi, who has sought to position China as a reliable partner in an increasingly unpredictable world, welcomed the comments from Merz, who faces a tough balancing act of redefining an economic relationship that is increasingly unfavourable to German interests . “The more turbulent and intertwined the world becomes, the more China and Germany need to strengthen strategic communication and enhance strategic mutual trust,” he said. In an earlier meeting with Premier Li Qiang, Merz said there were “very specific concerns regarding our cooperation, which we want to improve and make fair.” Merz’s comments reflect longstanding German concerns about what Berlin sees as an undervalued yuan, market-distorting subsidies and overcapacity among Chinese exporters that have built massive trade surpluses with Europe’s largest economy.

At the same time, his visit underlined the vital importance of China’s huge consumer market and the technical sophistication of its all-conquering manufacturers. “We want Chinese investment in Germany,” Merz said at a business event attended by senior German and Chinese business leaders from the tech and auto sectors. Li called on both sides to work together to safeguard multilateralism and free trade, in a comment seen as a reference to US President Donald Trump’s trade war.

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With oil prices near a six-month high, the energy sector has outperformed in 2026, but can it accelerate further? “China and Germany, as two of the world’s largest economies and major countries with important influence, should strengthen our confidence in cooperation, jointly safeguard multilateralism and free trade, and strive to build a more just and fair global governance system,” Li said. Despite their calls for deeper engagement, the agreements Merz and Li formalised after their meeting were narrowly targeted and in industries peripheral to both economies.

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