Why Germany helps harder EU commerce measures on China
Germany’s cautious method towards Beijing is cracking. For years, Berlin blocked a tougher line on what the European Union describes as China’s unfair commerce practices.
In the previous few months, that warning — a concern of Chinese retaliation that would damage German exporters — has given approach to a willingness to escalate.
Last week, Chancellor Friedrich Merz and French President Emmanuel Macron wrote collectively to European Commission President Ursula von der Leyen looking for a brand new software to cut a trading partner off from the EU’s single market if unfair practices proceed.
Clearly aimed toward Beijing, the letter warned the measure was mandatory towards international locations that “intentionally search to undermine … truthful market situations by political or financial means.”
China’s Commerce Ministry warned Europe would “endure the implications” if it adopted such a “kill-switch” plan, which was timed to coincide with essential EU-China commerce talks in Beijing final week.
The value of standing nonetheless
Noah Barkin, a senior adviser with analysis consultancy Rhodium Group’s China observe, advised DW that the threats to Germany’s export powerhouse “have satisfied Merz and his closest advisers that the advantages of motion outweigh the prices of inaction.”
Before the COVID pandemic, the 2 economies rose in tandem and German trade benefited from China’s ascent.
Since 2021, nevertheless, China has fallen from Germany’s second-largest export market to its ninth, in line with information from Germany Trade & Invest for the primary half of 2026.
Chinese rivals have rapidly closed the expertise hole and profit from a lot decrease prices and state subsidies. That stress is being felt particularly in Germany’s automaking, precision engineering and chemical compounds industries.
Why Berlin’s China coverage is altering
German car makers have suffered a big gross sales drop in China, which was as soon as their second-largest market. According to information from Rhodium Group, German automotive exports to China plummeted by 66% between 2022 and 2025.
Big German manufacturers now face heavy rivalry from a brand new wave of Chinese electric vehicle (EV) manufactures in different main financial hubs, together with Europe, which is forcing a wave of layoffs and possible factory closures.
In Germany alone, imports of recent Chinese-made vehicles rose 121% within the first seven months of the 12 months, in line with Destatis, the federal statistics company. Overall, Chinese-made autos accounted for practically 14% of whole car imports.
“After repeatedly shedding market share in China … it [the rivalry] appears to be hitting their enterprise inside the European automotive market,” Andreas Mischer, an affiliate fellow on the Berlin-based Mercator Institute for China Studies (MERICS), advised DW.
Mischer mentioned stress from Germany’s highly effective automotive foyer was key to Berlin’s “shifting perspective towards commerce protection devices.”
Industry stress grows for commerce defenses
Among the numerous German enterprise leaders who’ve demanded a extra hard-line method in current months, Oliver Richtberg, head of international commerce at VDMA, Germany’s mechanical engineering affiliation, was maybe probably the most blunt:
“We are at the moment being deindustrialized by way of unfair measures — and most firms are not prepared to simply accept this,” Richtberg advised Welt am Sonntag newspaper in August.
According to Eurostat, the broader EU’s items deficit with China was round €360 billion ($402 billion) final 12 months — successfully €1 billion per day — and widened once more within the first half of 2026.
While Brussels has been pushing again towards the dumping of low cost Chinese items, a separate industrial safety legislation and different anti-coercion measures are working into bother from Beijing and at house.
Business teams query industrial coverage proposals
The EU’s Industrial Accelerator Act, proposed in March, is supposed to drag manufacturing capital allocation again to Europe by favoring EU-based companies in public contracts and subsidies.
Foreign investments in key sectors would solely be accepted if European companions preserve majority management, which Beijing has framed as discriminatory.
The European Automobile Manufacturers’ Association (ACEA) warned final month that the draft act does little to counter the risk from cheaper Chinese rivals. In a place paper, it mentioned the inducement to produce inside the bloc needs to be giant sufficient to “cancel out the additional value of manufacturing domestically.”
Berlin’s chief concern was that China might place new export curbs on rare earth minerals and the magnets comprised of them. China has a stranglehold on these parts, that are important for German automotive, renewables and protection manufacturing.
Bloomberg final week cited unnamed German officers as saying {that a} new EU kill-switch could possibly be a “second-strike weapon” if Beijing blocked these exports. Brussels can also be contemplating unilateral limits on the variety of hybrid vehicles China can export to the EU, in line with the identical Bloomberg report.
EU weights extra commerce measures
Perhaps to keep away from such an open confrontation, the EU and China reached a “shared understanding” final week on the EU-China commerce talks in Beijing that would minimize Chinese exports of hybrid and plug-in hybrid autos to the European Union by greater than half.
That might have an effect on a number of tens of millions car exports from China to the EU over the subsequent few years, in line with EU Trade Commissioner Maros Sefcovic, who headed the European delegation.
Overall, new hybrid-electric vehicles within the EU reached practically 37% of all new vehicles registered from January to August, in line with ACEA information.
MERICS, in the meantime, calculated that the EU is a extra important export marketplace for China than the US. In the primary half of the 12 months, Chinese exports to the EU had been $254 billion, versus $172 billion to the US.
This might give EU negotiators a firmer hand as they search to keep away from a commerce warfare whereas defending Europe from China’s newest export glut.
“The EU has extra leverage than it typically thinks,” MERICS’ Mischer advised DW.
Edited by: Tim Rooks
