With a snap election happening on February 23, Germany once again finds itself on the crossroads regarding China policy. Unlike in 2021 however, the new government has to face an even bigger set of internal problems ranging from the stagnating economy to security issues. With the Union predicted to once again win back control of the Chancellery, what changes could we expect to see on China policy?
- A Harder Line on China Under Merz
Whilst former Chancellor Scholz is known to have often compromised on China frequently during his tenure (including his insistence at the selling of part of the Hamburg port to Chinese state firm COSCO), it is unlikely that Merz will follow through with a similar rhetoric. Since the full-scale Russian invasion of Ukraine in 2022, Merz has issued several warnings of doing business with China, naming it as a “threat” to German security for its role in supporting Russia’s invasion of Ukraine. With Merz in the Chancellery, companies will likely see less support from the government as the traffic light coalition did in investing in China, which saw two business delegations brought to meet Chinese leaders in two state visits by Scholz and Habeck in 2024.
- Balancing Economic Recovery with Strategic Autonomy
Despite the strong rhetoric, Merz’s campaign also places a heavy emphasis on “restarting” the German economy, which has been in recession for the past two years. Doing this will require Germany, along with EU partners, to focus either developing economic relations with the US or China as global tensions rise. Since Trump’s inauguration as the new US president, he has already raised steel import tariffs by 25%, as well as hinting further tariffs on the EU. Such a move will heavily impact the German and European steel industry, as Germany exports more than 3 billion USD worth of steel and iron products to the US. Despite Merz’s assertiveness, if Germany cannot readily rely on the US market to sell its goods, it may have to pivot back to China in order to avoid a third consecutive year of economic recession. How much Merz is therefore willing to sacrifice the German economy for long-term strategic autonomy will be the key question in Germany in the next four years. He will also need to balance this with any potential coalition partners, which range from the SPD’s continued unwillingness to take drastic action to the Greens’ more radical interpretation of “de-risking”.
- Future China-policymaking power lies now in Brussels, not Berlin
The era of Berlin’s singular dominance in shaping China policy has arguably reached its conclusion. While Merkel’s tenure saw Germany exert considerable sway over trade and foreign relations, Scholz’s perceived hesitancy, notably his opposition to the EU’s decision on Chinese EV tariffs, has undeniably damaged Germany’s standing and shifted the locus of influence towards Brussels in the “de-risking” debate. It falls to Merz, therefore, to not only mend fractured trust with key European partners, particularly France (who has enthusiastically supported the tariffs), but also to convince a skeptical Brussels of Germany’s renewed commitment to collaborative strategic autonomy.
Abstract:
Germany’s snap election on February 23 could bring a tougher China policy under Merz, marking a clear shift from Scholz’s pragmatic approach. While Merz warns against economic dependence, Germany’s recession may force a trade-off between strategic autonomy and economic stability. With China policy increasingly shaped by Brussels, Merz must rebuild EU trust to influence the bloc’s “de-risking” strategy.
