A More Pragmatic and Trusting Cooperation Ahead.

A New Phase of Managing Sino-German Relations

After the Visit of Chancellor Merz

Western visits to Beijing

German Chancellor Merz was the last in a row of representatives of major Western countries to oƯicially visit China. Canada’s Premier Carney had set a kind of benchmark some weeks ago. He had spent four days of successful talks and bargaining with an open mind and a clear aspiration for Win-Win. And he had taken a major package back home, from trade and investment agreements to people-to-people exchange, beneficial for both countries. Italy’s Meloni had visited in 2024 already, France’s Macron had visited China last December, and UK’s Starmer had followed suit later in January. All those visits were very successful for the countries involved, in all heralding a new phase of a more pragmatic and respectful exchange after some more challenging years. All were firmly motivated by new geoeconomic and geopolitical conditions that have worsened Canada’s position and particularly EU’s strive for a renewed identity, economic strength, and geopolitical power. The challenges are coming from both global change towards multipolarity and Washington’s erratic tactics. There certainly was no automatism in a turn of those major Western countries towards Beijing, but somehow it was “in the air”. And Beijing had always kept the door open, including signals of

increasing visa-free entries. Also Germany’s relationship with China needed some update, as there sometimes was a clear lack of diplomacy from Germany’s side in recent years. There were narratives of “superior values” and of a hostile rivalry. This was in face of Germany’s

particularly weak economic standing recently, with virtually zero growth, loosing positions in international competitiveness rankings, or in World Bank’s purchasing-power based GDP rankings. Specifically, Germany is experiencing problems of weak domestic investment and large outgoing investment rather. So, some turn was “in the air” here even more.

Some rivalrous behavior from the EU Commission

The EU Commission did not provide a particularly supportive background music for Merz’ visit. Rather than exercising some self-restraint, there was intensified discussion about renewed de-coupling, banning Chinese IT-firms from EU-network development, and Chinese researchers from EU research policy, and a relaunch of suspicions of “espionage” through Chinese EVs and E-busses purchased by EU communities for public transport. Further, there is ongoing rumor on new protective tariƯs against Chinese commodities and maintaining the “screening” and, in fact, interdiction of Chinese companies’ investments in the EU. Nothing of this appeared to be helpful for the Chancellor’s visit in any sense. The EU had also accelerated a number of free-trade agreements, with, among others, Mercosur, India, and Australia, with speculation in some media to use them for a “power play” in Beijing. However, this would have been a severe misjudgement of the global productivity relations and the reality of the global value-added chains (VACs). And some of the political circles of EU and Germany had enthusiastically applauded to U.S. secretary of state Rubio’s Munich speech with NeoCon and neo-hegemonic visions of U.S. violence for the world. Some in the EU still hope to get under some protective umbrella of Washington again. Framed that way, Merz’ visit might have easily become an “empty” effort and forlorn hope.

Merz has managed a pragmatic turnaround

Many in the EU and its Commission are stuck in the world of de-coupling and limiting the relations with China. But Merz was accompanied by the largest delegation of corporate CEOs (30) in a German representative’s visit ever. And their stances re. engagement in China have been rather clear. Merz apparently listened to them and changed his own attitudes as compared to what he himself had said in Munich a couple of weeks ago. The setting appeared to change towards an equal footing, open-mindedness, pragmatism,

and willingness to reestablish confident dialogue to discuss all issues of future Win-Win

cooperation. While the visit was set very tight, only 1.5 days net, fitting to both some initial

German reluctance and the tight schedule in Beijing, given the Two Sessions will start only a few days later, it was a big sign that President Xi took extensive time for personal exchange with Chancellor Merz. We also may assume that Merz personally learned what so many Westerners have experienced when coming to China in recent years: Hi-tech applications everywhere, new kinds of cities, impressive overall living conditions, and an overwhelming social and personal climate of communication with relaxed, friendly, and interested people. There also was time enough for him to visit industrial sites and learn how Mercedes develops EVs and driving technologies that they can transfer and apply at home. Not the least, the humanoid-robots dance or a “hello” with a humanoid at Unitree was apparently most impressive for him. So far, the German media have gone the way into a new phase of pragmatism together with Merz, and there is little critique of him. It is hoped this “credit” will hold for a while, until the next constructive steps have been gone and synergiues will deepen. It appeared to many that Merz bridged back to the Merkel era, which is meant to be a compliment. Many even enjoy the new relaxation, pragmatism, and willingness to trust and commitment.

Substantial results

The friendly forms were followed by substantial content, so to speak. Merz’ wording embraced a “comprehensive strategic partnership” even. China will order 120 Airbus aircraft, considering that the Tianjin Airbus plant just had been extended by a second assembly line last October. There will be renewed relevant Chinese import of pork and chicken from Germany. The minister of agriculture will visit China soon, and, as Merz announced, several German ministers will follow. Merz also confirmed Germany’s One-China Policy, and the regular annual Intergovernmental Consultations, halted in 2023, will be resumed, perhaps even as early as by the end of the year. This is substantial and strategic, the adequate form for

dealing with any issue in the two-countries’ relations.

Structural problems of Sino-German relations to be addressed in the future

There are still misleading narratives dominating in media and politics in Germany, the EU

and the West in general. These include misconceptions of “overcapacities”, “state subsidies”, “price dumping”, “unfair competition“ allegedly on the side of China. We have scrutinized and rectified all those narratives in a number of publications for long. Germany is in fact suƯering from the destruction of its natural Eurasian geoeconomic partnership, with cheap reliable Russian energy in exchange for German industrial products, the basis of Germany’s post-WWII success. For geopolitical reasons, these assets of its post-WWII rise had been destroyed in recent years. Now Germany has one of the highest energy costs among industrialized countries. The country appears a kind of divided: While many in the elites still are caught in a mental mode of hostility and war, its corporate economy, from big corporations to medium-sized enterprises, are investing abroad, and particularly so in China. That has often been the case against explicit advice and threat from Berlin and Brussels. But they say that T-I-N-A, “there is no alternative” (M. Thatcher) to doing so, if they would not want to lose their own corporate international competitiveness. China is not only their largest single market, it is their production and research-and-development (R&D) “gym”, their technological future. They need the joint ventures with Chinese partner firms, the abundant potentials of complete value chains and regional clusters, the advice, supplies, and services of the many young cutting-edge Chinese start-ups and unicorns, the high skills available, the modern, eƯicient, and cheap infrastructures, and the qualified private and public services.

As even the CEOs of the largest German corporations have left few options to explain their arguments in German media and have repeatedly been silenced or bashed in Germany’s geo-political media, they just “do their thing” and “vote by feet”. So, they build complete VACs in China, a kind of “autarkic” German corporate economy in China, and are caring to make themselves independent of their mother country and the EU to avoid being punished by Western sanctions one day perhaps. Their German first-tier suppliers have joined them in China and built production and R&D sites there as well. No wonder, thus, that German and EU industrial exports to China are ailing: the supplies are produced in China.

And it is no longer only about “Made in China for China”, but “Made in China for the World”. Products of German firms and Joint Ventures made in China do compete with products made in Germany in third markets, and in the last instance even in their home

market. Parts of increasing Chinese exports to Germany , therefore, are exports of German companies/Joint Ventures in China to Germany. And, not the least, German firms earn well in China so that after investment from their surplus, some billions can be transferred back home and support the German public budget with corporate taxes. Even as they are forced to go “friendshoring” and transfer assembly lines to “democracies”, international productivity and value-added structures cannot easily be distorted by political will and declaration. When, for instance, India or Vietnam get assigned more assembly from Western corporations, their imports of supplies from China usually increase proportionally.

Qualifying national development and industrial policies, joining the BRI?

Will intensified and more pragmatic cooperation qualify Western strategic development planning and industrial policies over time, away from just bureaucratic trade restrictions and interdictions of Chinese-investment, towards Win-Win, i.e., development and policy on a level playing field? Trade and investment issues as mentioned will have no chance of being solved

other than by open strategic cooperation, including addressing issues of international division of labor. The visit of the German Chancellor and its short-run substantial and procedural results have “bought time” and generated a “credit” in the first instance, which may not be consumed away soon. If Germany would want to regain its old economic strength and get on a level

playing field, it might open towards the larger “gym” of the world and strive for taking part in the Belt-and-Road Initiative, with its more than 150 partner countries. This may sound unrealistic today. Eastern parts of the EU have been in the BRI already for some years, some few have left, but most still are in, including Hungary, Greece, Austria, Poland, Czechia, and even Switzerland, and others. We may be some years away from that, but it could be a prime template of future Win-Win among Germany/EU and China.

Wolfram Elsner

March 1st, 2026