Industry puts pressure on Merz for China - Demands fair competition with Chinese rivals
German industry is increasing pressure on Chancellor Friedrich Merz to take a tougher stance on Beijing. Companies are demanding stronger action to address what they describe as unfair competition from Chinese rivals. The growing scrutiny from German business representatives marks a shift in a country that has long resisted trade barriers for fear of Chinese retaliation. How Berlin positions itself will help shape the European Union's broader trade stance on China, as talks between the bloc and Beijing are scheduled for October.
An OECD report, published in June, found that Chinese manufacturers received three to eight times more state support than rivals in other countries, relative to revenue, while subsidies accounted for almost 60% of their profits on the global market. Germany’s trade deficit with China widened by about 22 billion euros last year, to 89.3 billion euros, as imports rose by 8.8% and exports fell by 9.7%. “We need to discuss with China what is happening. If it is confirmed that this is attributable to subsidies or unfair competition, then it is a problem,” said Volker Treier, head of foreign trade at the German Chamber of Commerce and Industry.
The concern is particularly relevant for German carmakers like Volkswagen, which has been overtaken by local brands like BYD and faces increasing competition from Chinese rivals in the European market. Merz's coalition has toughened its language on China, but its messages remain mixed, combining calls to reduce economic dependencies with insistence that the country remain an important economic partner.
After signs of division over the issue within the German government coalition, Merz said he had asked the cabinet to work on proposals to address trade imbalances between the European Union and China. State subsidies and a yuan, which Deutsche Bank analysts consider about 15% undervalued against the euro, allow China to undercut prices in Germany by 30% to 40%.
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