German Chancellor Friedrich Merz urged Europe to strengthen its economy while maintaining ties with China, The Straits Times and Mothership reported after his Oct. 27 Singapore lecture.
The Straits Times quoted Merz describing decoupling as “a big mistake.” Mothership also reported that he favored continued cooperation with China alongside efforts to reduce risks and diversify economic relationships.
Before Merz’s February 2026 trip to China, Germany’s Federal Government outlined a similar approach: build German and European competitiveness while reducing exposure to one-sided dependencies. In remarks published by the government, Merz said, “A smart China policy starts here, at home.” The government said China was Germany’s largest trading partner in 2025, with bilateral trade above €250 billion; China held that position from 2016 through 2023.
Eurostat, the European Union’s statistical office, reported that the bloc exported €199.6 billion in goods to China in 2025 and imported €559.4 billion, leaving a €359.8 billion deficit. Exports fell 6.5% from 2024, while imports rose 6.4%. The European Commission has pointed to market-opening asymmetries, industrial policies and overcapacity as factors behind the imbalanced trade relationship.
The EU and China have also reached an understanding on hybrid and plug-in hybrid vehicle exports, though they describe its expected effects differently. On Oct. 9, European Commissioner Maroš Šefčovič said the arrangement could cut projected Chinese exports to the EU by more than half over four years compared with a scenario in which policy did not change. He said the reduction could amount to several million cars and warned that rising exports could put European industrial sectors and thousands of jobs at risk.
China’s Ministry of Commerce described the terms as an increase based on 2025 trade. It cited Eurostat data showing the EU imported 302,000 hybrid vehicles from China that year, and said the arrangement leaves Chinese firms room to grow while addressing industry concerns in both markets.
China’s ministry scheduled a ministerial video conference for January 2027, followed by the next China-EU Trade and Investment Consultations ministerial meeting in March 2027.
