Merz Issues Stark Trade Warning to China During Beijing Visit

Lead: On Feb. 25, 2026, German Chancellor Friedrich Merz traveled to Beijing and delivered a pointed public message to Chinese leaders urging fairer trade conditions. Speaking to the Advisory Council of German-Chinese Business with Premier Li Qiang in the room, Merz asked Beijing to reduce distortive subsidies, allow the renminbi to strengthen, and keep exports of critical raw materials flowing. He framed the push as both a request for closer bilateral ties and a demand for a level playing field for German industry. The visit combined conciliatory diplomacy with unusually direct economic criticism.

Key Takeaways

• Merz visited Beijing on Feb. 25, 2026, addressing the Advisory Council of German-Chinese Business in a session attended by Premier Li Qiang.
• He urged China to cut industrial subsidies and to permit a stronger renminbi, arguing these steps would improve competition for German exporters and manufacturers.
• Merz also pressed for continued exports of key raw materials, including critical minerals that Germany’s industry relies on.
• The chancellor balanced demands with overtures for closer diplomatic and economic ties between Germany and China.
• Observers noted his tone was more direct than recent western counterparts who visited Beijing, reflecting a tighter focus on industrial fairness.
• The visit echoes Merz’s earlier outreach to Washington, where he praised U.S. ties while seeking alignment on policy toward Russia and Ukraine.

Background

Germany and China have deep economic ties built over decades, with German manufacturers integrated into supply chains that include Chinese production and raw materials. Those links have delivered growth for exporters in sectors such as automotive, machinery and chemicals, but they have also generated concerns in Berlin about market distortions and supply-chain vulnerability. In recent years German policymakers have moved to balance trade engagement with strategic resilience, seeking alternatives for critical inputs and nudging partners on transparency.

Political context matters: Western capitals have been recalibrating relations with Beijing amid trade frictions, technology competition and differing geopolitical priorities. European governments face pressure to protect domestic industry while avoiding a breakdown in trade that could harm consumers and firms. Within Germany, industry associations and some lawmakers have been increasingly vocal about perceived unfair competition tied to subsidies, currency policy and export controls elsewhere.

Main Event

Merz’s speech in Beijing combined formal diplomacy with candid policy prescriptions. He thanked hosts and emphasized the mutual benefits of stable economic ties, then turned to specific grievances about state support for Chinese manufacturers and restrictions that impede fair competition. His requests were targeted: reduce subsidy programs that tilt markets, allow currency appreciation, and ensure steady exports of raw materials essential for European supply chains.

The audience included business leaders and senior Chinese officials, among them Premier Li Qiang, indicating the visit’s high diplomatic profile. German officials said Merz sought a constructive tone, presenting demands as steps that would deepen bilateral cooperation rather than punish China. Still, the bluntness of the message marked a shift from more ceremonial language often used on such state visits.

European and German industry reactions were mixed: some praised the chancellor’s forthright defense of manufacturers, while others warned against measures that could escalate tensions and disrupt trade. Beijing’s public response during the event stressed mutual respect and a desire to expand ties, but did not concede to specific policy changes on the spot.

Analysis & Implications

Merz’s demands reflect a broader European anxiety about industrial competition and supply security. If China were to scale back subsidies or loosen currency policy, German exporters could see more balanced market access; however, such policy shifts would be politically sensitive in Beijing and unlikely to happen rapidly. Subsidy programs are embedded in domestic industrial strategy and are often defended as necessary for employment and technological ambitions.

Asking for freer exports of critical minerals underscores the strategic nature of raw-material supply chains. Germany’s high-tech and automotive sectors depend on stable access to inputs such as lithium, cobalt and rare earth elements. Any Chinese curbs, voluntary or regulatory, would intensify European efforts to diversify sources and ramp up recycling and domestic extraction — moves that take years and substantial investment.

Merz’s approach also signals Germany’s attempt to balance relations with China and its security partnership with the United States. By taking a direct stance in Beijing while maintaining ties with Washington, Berlin aims to protect economic interests without severing diplomatic channels. The chancellor’s prior outreach to Washington last year, where he courted U.S. leaders while raising Ukraine-related concerns, illustrates this dual-track strategy.

Comparison & Data

The table above summarizes the core areas Merz highlighted and the realistic limits of near-term concessions from Beijing. Shifts on these fronts would have knock-on effects on inflation, industrial margins and investment decisions in Germany and across Europe.

Reactions & Quotes

German business groups responded publicly within hours. Many welcomed Merz’s defense of industry but urged continued engagement to avoid retaliatory measures. Analysts emphasized that the chancellor’s posture aimed to extract concrete guarantees while keeping diplomatic lines open.

“We can set an example through reliable and secure economic relations,”

Chancellor Friedrich Merz (paraphrased)

The German statement framed the request as mutual reassurance rather than confrontation. Officials presented the demands as pragmatic adjustments to improve market fairness and reduce uncertainty for companies operating on both sides.

“China values stable ties and is willing to discuss practical cooperation,”

Premier Li Qiang (paraphrased)

Beijing’s public messaging stressed continuity and cooperation but stopped short of promising policy reversals. State media described the meeting as constructive, emphasizing trade and investment expansion even as the underlying tensions were noted.

“Industry needs predictability on inputs and market access to plan investments,”

Independent industry analyst (paraphrased)

Experts suggested that concrete changes would likely come through negotiated, technical arrangements — such as supply agreements or improved customs procedures — rather than immediate macroeconomic shifts.

Unconfirmed

• No official commitment was announced that China will roll back specific subsidy programs; public statements described discussions but not policy changes.
• There was no immediate agreement on new long-term supply contracts for critical minerals announced at the event.
• Private bilateral talks between officials were reported by some outlets but their contents have not been independently verified.

Bottom Line

Chancellor Merz’s Beijing visit mixed diplomatic outreach with an unusually candid economic critique, signaling Berlin’s willingness to press China on concrete issues while preserving the wider relationship. The speech foregrounded three leverage points for Germany — subsidies, currency policy and raw-material exports — and set expectations for technical negotiations rather than instant breakthroughs.

For businesses and policymakers, the episode is a reminder that economic ties with China will be managed through layered diplomacy: public pressure, behind-the-scenes negotiation and longer-term industrial strategy. Watch for follow-up talks, targeted supply agreements, and EU-level coordination as likely next steps rather than rapid, sweeping policy shifts.

Sources

• The New York Times — news report
• German Chancellery — official government site
• Xinhua — Chinese state media