But few expect any sweeping deals will be reached. German industry leaders are instead calling for more concrete and immediate progress to improve their circumstances.
“Our companies are coming under increasing pressure because key competitive conditions are being systematically distorted,” Thilo Brodtmann, the managing director of VDMA, said in a statement ahead of Merz’s trip. As a consequence, he said, German machinery exports to China fell by 8.5 percent during the first 11 months of last year, while machinery imports from China rose by 12.5 percent.
Brodtmann called on the chancellor to address Chinese export controls on rare earths and to end China’s practice of subsidizing loss-making “zombie companies” that offer cut-rate prices. “German companies are not competing with other companies, but with the Chinese treasury,” he said of subsidies more broadly.
The most powerful tool Merz has at his disposal is China’s growing dependence on the European market, which only increased as Chinese domestic demand has fallen. For Merz, a longtime free-trade purist, a push to threaten defensive tariffs within the framework of the EU is not only anathema — it’s potentially reckless at time when Germany is also dealing with the fallout of Trump’s trade wars.
Trump’s attempt to confront China also provides something of a cautionary tale. In the midst of a trade feud between the U.S and China last year, Beijing announced sweeping export controls on rare-earth magnets and the raw materials needed to make them. Weeks later, Trump and Xi reached a detente, with Beijing agreeing to delay rare earth export restrictions for one year.
But Nicolas Zippelius, a lawmaker focusing on China relations for Merz’s conservatives, said Merz may be more forceful than he lets on in public.
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