‘China shock’ hits Germany as Merz joins Beijing pilgrimage
South China Morning Post
by Brian Rhoads,Raymond MaFebruary 26, 2026
AI-Generated Deep Dive Summary
German Chancellor Friedrich Merz raised concerns about China's industrial overcapacity during his meeting with President Xi Jinping, highlighting the growing trade deficit between the two nations which has quadrupled since 2020. Merz emphasized that this imbalance is unsustainable and poses risks to global economic stability. He stressed the need for a more balanced relationship, particularly as Chinese overproduction continues to impact international markets.
The close economic ties between Germany and China have long been a double-edged sword. While they fostered significant trade and investment flows, they also created vulnerabilities. For instance, German manufacturers faced challenges last year when China tightened export controls on essential computer chips, disrupting supply chains and revealing the fragility of their interdependence. Merz pointed to these risks during his remarks in Beijing, underscoring the delicate balance both nations must maintain.
Merz's comments come at a time when Germany is actively seeking to address its trade deficit with China. The country has been working to diversify its supply chains and ensure fair trade practices. However, achieving this while maintaining strong economic ties remains a complex challenge. Merz also hinted at the broader implications of China's industrial policies on global markets, urging a reevaluation of existing trade dynamics.
This issue matters significantly to readers interested in global economics and international relations. The evolving relationship between Germany and China highlights the broader tensions and opportunities within the global economy. As the world navigates shifting geopolitical landscapes and economic uncertainties, understanding these dynamics becomes crucial for businesses, policymakers, and consumers alike.
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Originally published on South China Morning Post on 2/26/2026