Merz calls for Chinese investment as Germany seeks economic reset

German Chancellor Friedrich Merz urged Chinese companies on February 25 to increase investment in Germany while calling on Beijing to reduce market distortions, as he launched a visit aimed at resetting relations between the world’s second- and third-largest economies.

On his first trip to China as Chancellor, Merz, accompanied by a large German business delegation, met President Xi Jinping and stressed the importance of deepening economic ties with China, Germany’s largest trading partner last year, Caliber.Az reports via foreign media.

"There are challenges, which we should talk about today, but the framework in which we operate is exceptionally good, and we have worked together very well over the past decades," Merz said.

Xi welcomed Merz’s comments, highlighting the need for closer cooperation amid global uncertainty. "The more turbulent and intertwined the world becomes, the more China and Germany need to strengthen strategic communication and enhance strategic mutual trust," he said.

Earlier, Merz met with Premier Li Qiang and raised “very specific concerns regarding our cooperation, which we want to improve and make fair.” His remarks reflect longstanding German worries about an undervalued yuan, market-distorting subsidies, and overcapacity among Chinese exporters contributing to massive trade surpluses with Europe’s largest economy.

At a business event attended by senior leaders from the tech and automotive sectors, Merz reiterated: "We want Chinese investment in Germany."

Li called for joint efforts to defend multilateralism and free trade, signaling concern over U.S. trade tensions. "China and Germany, as two of the world's largest economies and major countries with important influence, should strengthen our confidence in cooperation, jointly safeguard multilateralism and free trade, and strive to build a more just and fair global governance system," he said.

Limited deals, big business focus

Despite calls for deeper engagement, the agreements signed by Merz and Li were narrow in scope, focusing on climate change, green transition, animal disease prevention, a poultry products protocol, and sports collaboration in football and table tennis. Analysts noted these deals were less significant than those secured by Canada and Britain during recent visits.

Still, the business-focused portion of Merz’s visit could yield more substantial deals. He is accompanied by a delegation of 30 firms, including Volkswagen and BMW, which are feeling increasing pressure from Chinese competition and the resulting trade imbalance that has spurred calls for protectionist measures.

China-EU relations under spotlight

China is positioning itself as a reliable economic partner as Europe grapples with supply chain vulnerabilities and concerns over dependence on Chinese markets. Engagement with Germany could set the tone for broader EU-China relations this year.

While China’s market was once highly prized for its size and rising consumer spending, a slowing economy and manufacturing overcapacity have changed the landscape. Chinese state media have emphasised the stabilising potential of EU-China cooperation amid U.S. trade policies.

By Aghakazim Guliyev