Buying time: Germany between a changed US and rising China

German Chancellor Friedrich Merz’s visit to China in February 2026 symbolised the reality of German diplomacy. While advocating for “de-risking” to reduce dependence on China, Germany must simultaneously establish conditions that allow German companies to profit in the Chinese market. Amid this contradiction, Chancellor Merz is conducting an extremely pragmatic form of diplomacy.

While Germany ranks as the world’s third-largest economy by GDP, it still trails far behind the US and China. Militarily, it remains a middle power. Its influence is most significant when exercised through the framework of the European Union (EU).

The German economy, once heavily reliant on Russian natural gas, has been battered by the war in Ukraine and the sanctions against Russia that have persisted for four years. Once so robust under Angela Merkel that it was dubbed the EU’s “sole winner”, it is now grappling with sluggish growth.

The Merz administration’s policy is to escape this situation and put the economy on a recovery track by advancing a growth strategy based on innovation, deregulation, and digitalisation. In terms of migration, the government continues to implement strict policies to suppress the rising dissatisfaction caused by excessive inflows of migrants.

The government maintains this stance because there is an increasing risk that if the government does not immediately address public discontent in the realms of economic and social policy, the far-right Alternative for Germany (AfD) party — which has expanded as a vessel for such grievances — could even secure a majority in the state parliamentary elections in eastern Germany this September.

While Germany is highly competitive in industrial sectors such as automobiles, machinery, and chemicals, its economy is supported by exports. For Germany, as a trading nation, China remains a particularly important market. During his visit to China on 25-26 February, Merz was accompanied by executives from Germany’s leading corporations.

For a long time, Germany valued China as both a vital export market and a source of low-cost products. For Germany, which holds free trade as a principle of prosperity, this was self-evident. However, concerns over human rights and shifts in the security environment have since transformed the relationship.

Consequently, following the previous Scholz administration, the Merz administration has emphasised Japan as a partner for cooperation in East Asia and has been cautiously exploring how to calibrate its distance from China.

During this visit, Merz clearly prioritised pragmatic interests in relations with China. While pointing out issues inherent in China’s state-led economy — such as the need for “de-risking” based on EU cooperation and ensuring fair competition — he maintained a friendly stance during the summit. This stems from the recognition that confrontational remarks yield little, and that maintaining a positive relationship with China serves both political and economic interests.

This pragmatic posture was also evident during his meeting with US President Donald Trump in Washington, which took place after the commencement of strikes on Iran. Germany has voiced significant concerns over the announcement of new tariffs, justified under different legal grounds, following a court ruling that struck down the legal basis for the previous “Trump tariffs”. While this issue, along with the continuation of support for Ukraine, was expected to be a primary agenda item for the summit, the Iran crisis occupied a major portion of the discussions.

Germany, which also values its relationship with Israel, avoided framing the strikes on Iran as a question of international law. Instead, it focused on Iran’s nuclear programme and human rights record. Consistent with past practice, German policymakers judged that preserving a constructive relationship with US President Donald Trump would yield greater benefits than clashing over principle.

In summits with the two superpowers, the US and China — both of whose current trajectories are incompatible with the international norms and multilateral order that Germany has traditionally championed — Merz strove to maintain favourable relations, even at the risk of being criticised for neglecting fundamental principles.

However, this does not mean that the basic principles of German diplomacy have changed under the Merz administration. Rather, the leader’s approach has evolved in response to changing circumstances, namely the transformation of the US and the further rise of China.

Merz took the trouble to speak with Japanese Prime Minister Sanae Takaichi on the phone, both before his visit to China and after his visit to the US. Leveraging these calls to showcase Japan‑Germany cooperation grounded in shared values, while also engaging pragmatically with both the US and China, reflects the approach of a leader with such an extensive political career.

Whether advancing “de-risking” with China by prioritising economic security, or pursuing a fundamental strengthening of defence capabilities through European strategic autonomy and security, both processes take considerable time. Given the constraints of budget, technology and political consensus, neither economic structures nor defence capabilities can be significantly transformed in just a few years.

Merz’s visits to China and the US represent a strategy to buy time: maintaining friendly relations through diplomatic efforts in the short term to create a modicum of stability while preparing for long-term structural changes.

No matter how unreasonable the policies of the Trump administration may be, an EU burdened by the issue of support for Ukraine and concerns over its own security cannot confront Russia without the US. Underlying Merz’s diplomacy is the recognition that for a middle power, there is no realistic path other than maintaining good relations while working to remove obstacles, rather than opting for confrontation with an increasingly influential China.

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