German Chancellor Friedrich Merz concluded his first official visit to the Chinese mainland this week, marking a pivotal moment in bilateral relations as both industrial powerhouses adapt to shifting global dynamics. Accompanied by a delegation of 120 business leaders, the visit underscored Germany's commitment to maintaining economic ties despite growing technological competition.
During meetings in Beijing, Chinese President Xi Jinping emphasized strategic communication as key to managing what he called "the dual nature of collaboration and rivalry." He advocated for enhanced cooperation in talent exchange, technology sharing, and supply chain stability—priorities reflecting China's push to stabilize foreign partnerships amid global economic uncertainties.
Premier Li Qiang highlighted enduring industrial synergies, noting Germany's leadership in precision engineering complements the Chinese mainland's strengths in digital integration and rapid tech commercialization. However, the nature of this complementarity is evolving. Once defined by distinct roles in global value chains, both nations now compete directly in sectors like electric vehicles (EVs) and battery technology.
China's EV market, accounting for 60% of global sales in 2025, exemplifies this shift. While domestic brands dominate, German automakers are responding by expanding R&D centers across the Chinese mainland. A 2026 German Chamber of Commerce survey reveals 78% of member firms now view China as an innovation partner rather than just a manufacturing base.
Analysts suggest this competitive interdependence could redefine global trade frameworks. As Chancellor Merz stated: "Our task isn't to avoid rivalry, but to ensure it drives progress rather than division." With both economies contributing 25% of global manufacturing output, their ability to balance cooperation with healthy competition will significantly influence Asia-Europe trade corridors this year.
