Huang Mengmeng: Germany's China policy should not be swayed by anxiety

Recently, the "China Committee" of the German Bundestag released a semi annual work report on security related economic relations between Germany and China, recommending a "de risk" approach towards China, reducing dependence on key raw materials, strengthening protection of critical infrastructure and sensitive technologies, maintaining industrial competitiveness, and enhancing coordination within the European Union. This report not only reflects Germany's concerns about supply chain security, but also reflects its deep anxiety in the face of Chinese industrial competition, changes in industrial advantages, and adjustments in the international geopolitical and economic landscape.

On the occasion of the China EU trade negotiations, the China Council released its first semi annual report, stating that Germany's economic and security situation with China is becoming increasingly severe, and the three-dimensional strategy of "partners, competitors, and institutional rivals" pursued by Germany and the EU in recent years no longer has guiding significance towards China. The "competition" and "risks" in Germany's economic relations with China are becoming increasingly prominent. In response to the insufficient implementation of existing "de risk" measures in Germany and inadequate coordination in Europe, the report advocates a shift from "decentralized response" to "systemic governance": it is recommended to establish a cross departmental economic security assessment mechanism, strengthen critical infrastructure, core technologies, and investment reviews; Reduce supply chain dependence through diversified raw materials, strategic reserves, and international cooperation; Utilize EU trade defense tools to address competition and strengthen coordination between the EU and the G7.

Where does Germany's anxiety about China come from? One is the worsening trade imbalance, putting pressure on German exports. In 2025, Germany's trade deficit with China will continue to widen; In the first half of 2026, this trend will continue, with exports to China decreasing by over 12% year-on-year. China's manufacturing industry has expanded from cost advantages to technological and scale advantages, and the economic interaction between China and Germany has shifted from traditional complementary upstream and downstream industrial chains to direct competition in fields such as automobiles, machinery, and batteries. At the same time, the imposition of tariffs by the United States has pushed more Chinese goods into the European market, further increasing the competitive pressure on German domestic enterprises. However, the trade deficit cannot fully reflect the deep integration of bilateral economic and trade relations and industrial chains: German companies such as Volkswagen and BMW have long been deeply involved in the Chinese market, and their production, profit reinvestment, and product return in China are also included in Germany's import data from China.

Secondly, there is a mismatch between Germany's expectations for the business environment in China and changes in its own competitiveness. On the one hand, Germany demands that China expand market access, improve the business environment, and strengthen intellectual property protection, while on the other hand, it hopes that China's advantageous industries will adjust their export and competition methods, presenting a contradictory mentality of "seeking both market dividends and competition protection". In the past, Germany was able to continuously benefit from the complementary industries between China and Germany through its brand, technology, and industrial advantages; Nowadays, Chinese companies are accelerating their technological upgrading, especially in the traditional advantage of the German automotive industry, catching up. Germany's previous model of relying on technological stock and market advantages to obtain profits is difficult to continue, so it is more inclined to use tools such as EU anti subsidy, anti-dumping, and investment review to reshape competition rules and try to make up for the relative decline in competitiveness.

The third is the continued coordination of technology and security between the United States and Europe, and the accelerated securitization of economic and trade relations with China. During Trump's second term, the role of permanent strategic coordination mechanisms such as the US European Trade and Technology Committee (TTC) towards China weakened, but the United States still pushed allies to strengthen cooperation in key technologies and supply chain security through new multilateral initiatives such as "Silicon Peace", which prompted Germany to incorporate more of its economic and trade relations with China into its security framework.

The fourth is that the change in German society's perception of China has amplified policy pressure. The discussions in German media about the "China shock," industrial decline, and job loss have reinforced the suspicion of German society towards China, making economic and trade competition gradually a public issue involving national security and social stability. Therefore, the "China Committee" suggests tightening economic policies towards China not only to address industrial competition and supply chain risks, but also to respond to the growing policy pressure domestically.

The "China Committee" of the German Bundestag is pushing for a tightening of economic and security policies towards China, reflecting Germany's anxiety about trade imbalances, weakened industrial advantages, and supply chain dependence. Its deep concern is that Germany and the EU will lose economic and technological initiative in the context of intensified competition among major powers. In fact, the decline in Germany's local competitiveness does not mean an overall decline. Germany still has advantages in areas such as basic research and high-end manufacturing. If Germany magnifies China's partial technological catch-up as a systemic threat and relies on EU trade protection policies to respond to competition, it may actually weaken its own innovation vitality and competitiveness.

Both China and Germany should objectively view each other's strengths and weaknesses, enhance innovation capabilities through open cooperation, coordinate and control economic and trade frictions through rules, and explore cooperation models that benefit China, Europe, and the world. Only then can we avoid vicious competition, achieve competition control, and achieve mutual benefit and win-win outcomes. (The author is an associate researcher at the Institute of European Studies, Chinese Academy of Social Sciences)