Germany's China calculation shifts as import pressures eclipse export benefits

Germany's cautious approach toward Beijing is cracking. For years, Berlin blocked a harder line on what the European Union describes as China's unfair trade practices.

In the last few months, that caution — a fear of Chinese retaliation that could hurt German exporters — has given way to a willingness to escalate.

Last week, Chancellor Friedrich Merz and French President Emmanuel Macron wrote jointly to European Commission President Ursula von der Leyen seeking a new tool to cut a trading partner off from the EU's single market if unfair practices continue.

Clearly aimed at Beijing, the letter warned the measure was necessary against countries that "deliberately seek to undermine ... fair market conditions by political or economic means."

China's Commerce Ministry warned Europe would "suffer the consequences" if it adopted such a "kill-switch" plan, which was timed to coincide with crucial EU-China trade talks in Beijing last week.

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Noah Barkin, a senior adviser with research consultancy Rhodium Group's China practice, told DW that the threats to Germany's export powerhouse "have convinced Merz and his closest advisers that the benefits of action outweigh the costs of inaction."

Before the COVID pandemic , the two economies rose in tandem and German industry benefited from China's ascent .