China Shock’ Hangs Over German Leader Friedrich Merz’s First Visit to Beijing

German Chancellor Friedrich Merz arrives in Beijing at a moment of heightened economic and geopolitical tension. His first official visit to China comes under the shadow of what analysts increasingly describe as the “China shock” — a wave of competitive pressure from Chinese exports that has unsettled Europe’s industrial base, particularly in Germany.

For Europe’s largest economy, the stakes could hardly be higher. Germany’s export-driven model has long relied on trade with China, its most important commercial partner for years. Yet the relationship that once symbolized mutual economic gain now carries deeper anxieties about dependency, industrial decline, and strategic vulnerability.

Understanding the “China Shock”

The term “China shock” originally referred to the surge of Chinese imports that reshaped manufacturing sectors in Western economies during the early 2000s. Today, a new version of that shock looms over Europe. It is not merely about low-cost consumer goods; it centers on advanced industries such as electric vehicles, renewable energy equipment, batteries, and industrial machinery.

German manufacturers — especially automakers — are feeling mounting pressure. Once dominant in global automotive markets, companies based in Germany now face intense competition from rapidly innovating Chinese electric vehicle producers. Lower production costs, strong domestic support policies, and fast technological scaling have enabled Chinese firms to challenge established European brands.

As Merz meets Chinese officials, concerns about fair competition, subsidies, and market access are likely to dominate discussions.

Germany’s Economic Crossroads

Germany’s industrial model has long depended on high-value exports, precision engineering, and automotive excellence. China has played a dual role in this model: a vast consumer market for German cars and machinery, and a key supplier of critical components and raw materials.

However, the geopolitical environment has shifted. Supply chain disruptions, energy price volatility following the war in Ukraine, and rising trade tensions between China and the United States have exposed vulnerabilities in Germany’s economic strategy.

Merz faces a delicate balancing act. On one hand, German companies continue to generate significant revenue in China. On the other, policymakers in Berlin and across the European Union are increasingly advocating for “de-risking” — reducing excessive reliance on a single external partner without fully severing economic ties.

Strategic Autonomy vs. Economic Reality

European leaders have emphasized the importance of strategic autonomy in critical technologies and supply chains. The EU has launched initiatives to strengthen domestic production of semiconductors, batteries, and green technologies. Yet building competitive capacity takes time and investment.

China, meanwhile, continues expanding its industrial capabilities at remarkable speed. Its dominance in battery production and renewable energy components places European industries in a challenging position. German firms seeking to transition toward electric mobility must navigate competition from Chinese brands that combine affordability with advanced technology.

Merz’s visit to Beijing therefore carries symbolic weight. It signals Germany’s intent to maintain dialogue even amid rising caution. Diplomacy, rather than confrontation, remains Berlin’s preferred approach.

Political Dimensions of the Visit

Beyond economics, the trip unfolds within a broader geopolitical landscape. Relations between China and Western democracies have grown more complex in recent years. Issues ranging from trade imbalances to human rights concerns shape European debates.

Merz must also consider Germany’s transatlantic alliance with the United States. Washington has adopted a firmer stance toward Beijing, particularly in technology and national security sectors. Aligning too closely with either side carries diplomatic risks.

For Germany, preserving economic prosperity while safeguarding political principles requires careful calibration. The outcome of Merz’s discussions in Beijing may influence not only bilateral ties but also broader EU policy toward China.

The Automotive Industry at the Center

Few sectors embody the China shock more vividly than automotive manufacturing. German brands have long enjoyed strong reputations in the Chinese market. Yet domestic Chinese electric vehicle companies are rapidly gaining market share with competitive pricing and innovation.

Moreover, Chinese firms are expanding into Europe, offering electric models that challenge European manufacturers on both cost and performance. The prospect of intensified competition has sparked debate within Germany about industrial policy, tariffs, and state support.

Merz is likely to emphasize the need for reciprocity — ensuring that German companies operating in China enjoy equal access and fair regulatory treatment. At the same time, he must reassure domestic industries that Berlin is attentive to their concerns.

Energy Transition and Green Technology

Germany’s commitment to renewable energy adds another layer of complexity. Chinese manufacturers dominate global production of solar panels and battery components. While this dominance lowers costs for green transitions, it also deepens dependency.

Balancing climate goals with economic resilience is a recurring theme in European policymaking. Merz’s visit offers an opportunity to explore cooperation in green technology while addressing supply chain security.

A Defining Diplomatic Moment

Friedrich Merz’s first visit to Beijing represents more than a ceremonial milestone. It unfolds at a time when Germany is reassessing its global economic strategy. The “China shock” underscores the reality that globalization’s benefits are no longer evenly distributed or politically uncontroversial.

For Germany, engagement with China remains essential. Yet the tone has shifted from unqualified partnership to cautious pragmatism. The challenge for Merz lies in strengthening economic ties without compromising strategic resilience.

As discussions unfold in Beijing, observers across Europe will be watching closely. The outcomes may shape Germany’s industrial future, influence EU trade policy, and redefine Europe’s relationship with one of the world’s most powerful economies.

In an era marked by economic transformation and geopolitical tension, Merz’s diplomatic approach will help determine whether Germany can navigate the China shock with stability — or whether deeper structural adjustments await Europe’s economic engine.