China, Germany vital for a changing world

The leaders of the world's second — and third-largest economies met in Beijing on Wednesday. When Chancellor Friedrich Merz sat down with President Xi Jinping, the discussion was bilateral. The consequences may not be.

Last year, China once again became Germany's top trading partner — a reminder that, for all the talk of "de-risking", the gravitational pull between Europe's industrial powerhouse and Asia's manufacturing colossus remains strong. The question facing the two leaders is not whether the relationship matters. It is how the two export-driven manufacturing superpowers can recalibrate their balance in an era when the old equilibrium has clearly shifted.

In relative terms, Germany is losing ground. Nowhere is this more visible than in the automotive sector. Once the uncontested symbol of German industrial supremacy, it is now an arena in which Chinese electric vehicle makers are setting the pace in battery integration, software ecosystems, and price competitiveness. German brands still command prestige, but prestige is no longer enough in a market defined by scale and speed.

And yet, the story is not one of simple decline. German companies continue to thrive in China under a "China for China" logic: producing locally, innovating locally, and tailoring products to one of the world's most dynamic consumer markets. For companies manufacturing chemicals, machinery, and premium autos, the Chinese market is not optional — it is foundational. Disconnection would not merely be costly; it would be strategically self-defeating.

Consider robotics and automation. Merz is expected to visit Unitree in Hangzhou, a symbol of China's rapid ascent in embodied AI and advanced manufacturing. For German industry, long synonymous with precision engineering, remaining plugged into China's innovation ecosystem is no longer a matter of opportunism. It is a matter of survival. To cut oneself off from one of the world's fastest-moving laboratories of industrial innovation would be to accept gradual marginalization.

Merz's trip is part of a striking diplomatic sequence. Coming after visits by French President Emmanuel Macron, Canadian Prime Minister Mark Carney and British Prime Minister Keir Starmer — four Western leaders in the span of three months — it is clear that engaging Beijing is no longer controversial realism but a strategic necessity. Whatever rhetorical hedges are employed in various capitals, the underlying calculus is shared: one cannot shape the emerging order while ignoring one of its principal architects.

As Carney noted at the 2026 World Economic Forum in Davos in January, and as was reiterated at the Munich Security Conference, the "old order" has dissolved. The post-Cold War moment — anchored in uncontested US primacy and deepening globalization — has given way to something more fragmented and more fluid. The new order's contours remain uncertain, but one constant is evident: Beijing will be central to its formation. Not always loudly, not always dramatically — but persistently.

China is not merely reacting to global change; it is helping shape it. Through industrial policy, infrastructure diplomacy, standards-setting in emerging technologies, and an expanding role in global institutions, it is quietly weaving itself into the structural fabric of the 21st-century economy. To pretend otherwise is to mistake preference for reality.

This is the context in which Merz must operate. Germany cannot afford naïveté about political differences, market asymmetries, or security concerns. Nor can it afford economic romanticism. Strategic disengagement would be an error of equal magnitude. The task is more demanding: to pursue optimal relations — sincerely cooperative where possible, firm where necessary, clear-eyed throughout — a method that mirrors China's.

What is increasingly evident is that China has become an engine of modernity — in green technologies, digital platforms, smart manufacturing, and urban scale. That modernity is State-shaped, politically conditioned, and strategically ambitious. But it is modernity nonetheless. For Germany, whose prosperity rests on mastering industrial transitions, the choice is not whether to engage. It is how.

Merz's challenge in Beijing is therefore neither to concede nor to confront reflexively. It is to anchor Germany within a transforming global system by recognizing a simple truth: in the world that is emerging, durable prosperity will depend less on choosing sides than on mastering complexity.

The author is a specialist in global affairs and Sinology, and the founder of the China-Europe-America Global Initiative.

The views don't necessarily represent those of China Daily.

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