Drivers behind Germany’s push for deeper economic ties with China

By Ibrahim Khalil Ahasan*

On November 17, 2025, Beijing hosted the Fourth China–Germany High-Level Financial Dialogue, co-chaired by China’s Vice Premier He Lifeng and Germany’s Vice Chancellor and Finance Minister Lars Klingbeil. The meeting took place amid persistent trade frictions, supply-chain challenges, and geopolitical uncertainty, creating a context in which both countries are seeking clearer economic coordination.

The dialogue, established several years ago, has become a platform for discussing fiscal, financial, and macroeconomic policy. The joint statement released after the meeting reaffirmed that the mechanism enables regular communication on strategic and long-term issues. Both governments noted that such exchanges can help stabilize bilateral economic relations and contribute to broader financial stability. They also signalled support for strengthened macroeconomic policy coordination through multilateral institutions and joint efforts toward economic recovery and sustainable development.

Recent shifts in trade dynamics have added urgency to these discussions. German media reports highlight concerns in Berlin regarding Germany’s trade deficit with China and perceived excess industrial capacity in sectors such as steel, solar components, and electric vehicles. At the same time, supply chains in critical areas, including rare-earth materials and electric mobility, have been affected by geopolitical pressures. German industry, which is integrated with Chinese manufacturing, has been sensitive to these developments. During his visit, Minister Klingbeil stated that Germany prefers direct communication with China on these issues, reflecting Berlin’s interest in addressing structural concerns through dialogue.

China has also expressed interest in maintaining stable and predictable relations with Germany. The joint declaration from the meeting included a commitment to expand two-way market access based on fair competition. Two-way trade totalled €253.1 billion in 2023, and China was Germany’s largest trading partner in the first eight months of 2025. Both sides view continued engagement as important for managing risks and identifying areas for cooperation.

Each country brings distinct strengths to the economic relationship. Germany remains competitive in precision manufacturing and green technologies, while China offers scale, a large consumer market, and growing capabilities in digital and electric-vehicle industries. Officials and analysts have pointed to opportunities for collaboration in electric mobility, manufacturing automation, and green infrastructure. German companies continue to see China as a key market in sectors such as mechanical engineering, automotive components, electrical engineering, and chemicals. Efforts to strengthen supply-chain resilience—such as improving freight links, enhancing financial cooperation, and encouraging localized production—are viewed as potential stabilizing measures. German direct investment in China has reached record levels in recent years, reflecting continued commercial interest.

Debates about industrial capacity remain a sensitive point. China argues that rising global demand for electric vehicles, batteries, and solar products supports its production scale. Germany has called for clearer dialogue on supply-chain transparency, market-access rules, and research collaboration. The joint statement indicated willingness on both sides to address these issues through data-based discussion and high-level coordination.

The meeting also reaffirmed support for multilateral economic governance. Both governments emphasized their commitment to a rules-based, open, and inclusive trading system centered on the World Trade Organization. This stance reflects shared concerns about rising protectionism and fragmentation in the global economy.

Politically, the dialogue carried significance. Klingbeil became the first minister from Germany’s new government to visit China, signalling Berlin’s intention to sustain high-level communication. The presence of senior financial regulators from both countries underscored the importance placed on regulatory cooperation, particularly in banking, insurance, and capital markets. China’s senior-level representation conveyed similar intent.

The dialogue addressed several practical areas of interest: improved market access for German financial institutions, deeper connectivity between China’s capital markets and European investors, and enhanced mechanisms for risk management and financial-system stability. The joint statement highlighted the need to strengthen cooperation in fiscal and financial matters, expand two-way market openings, and support international economic governance.

The outcomes of the Fourth China–Germany High-Level Financial Dialogue point toward several areas of continued engagement: reinforcement of multilateral commitments, discussion of industrial adjustments, expanded financial linkages, and sustained dialogue amid global economic uncertainty. Implementation will determine the extent to which these commitments translate into tangible progress. For both countries, maintaining regular communication remains an important tool for managing economic risks, addressing policy concerns, and supporting a more stable bilateral economic relationship.

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