President Xi could just leave his red carpet out on the tarmac at this point: France’s Macron was there in December, then in January he welcomed Canada’s Carney, Finland’s Orpo, and the UK’s Starmer, until Germany’s Friedrich Merz landed just this week.
But don’t let all Europe’s social feed China-maxxing distract you from the bigger picture.
If you think about it, some of Merz’s biggest problems now intersect with China.
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First, there’s Germany’s economy, which has basically flatlined for six years. What’s that got to do with China? Look at those trade numbers:
- Germany’s exports to China are down almost a quarter since 2022, while China’s sales back to Germany spiked 10% last year alone. Or to put it another way, Germany’s trade deficit with China has quadrupled since 2000.
And while trade deficits can be normal, in China’s case they can point to two things:
i) Xi’s big Made in China strategy (backed by vast state subsidies) has launched his country up the value chain to the point where, instead of buying advanced stuff from Germany, China now makes its own — that not only means buying less from Germany, but also eating into Germany’s market share around the world.
And to give you a sense of the scale, Germany’s auto exports to China are now down 66% since 2022!
ii) The other economic factor on Merz’s mind is his big supply chain reliance on China, with ~200 German product groups still flagging a major dependency on China for things like the critical minerals, chemicals, and chips needed for EVs, turbines, and defence.
And taking these two together, that second problem (supply chains) makes it hard for Merz to tackle the first (value chains). How? The moment he or the broader EU moves to probe China’s unfair practices, Beijing just threatens Germany’s access to key inputs.
It all helps explain Merz’s rhetoric (and entourage of CEOs) on this China trip, describing Germany-China economic ties as “unhealthy“, and calling for fairer market access, all while smile-maxxing with Xi on the red carpet.
The second China-thing on Merz’s mind is Putin’s invasion on Europe’s doorstep, backed by China’s oil-buys and industrial capacity, and launched just days after Putin and Xi declared their famous ‘no-limits’ partnership. We just explored Ukraine on Tuesday, but suffice to say Merz has already raised it with Xi.
And the third thing on Merz’s mind here is realistically-if-indirectly… the US! The German leader has been at the forefront of capitals declaring the old US-led world order dead, partly (in his view at least) as a result of Trump 2.0 abdicating that US leadership role, but also as rivals like China and Russia seize the opportunity to shape whatever comes next.
So that airport red carpet greeting Western VIPs in Beijing? Maybe it’s more a tightrope.
Intrigue’s Take
China is a massive power that’s not going anywhere, so engagement isn’t optional.
But the experience of Merz and the conga line of Western leaders before him reminds us how much today’s engagement with China is such a tightrope.
First, some criticise Merz et al for dunking on US abdication then jetting to authoritarian China the next day, but dismissing it all as hypocrisy doesn’t get you very far. The reality is this is how world leaders play their cards when caught up in Great Power CompetitionTM.
Second, it’s a tightrope, but they’re not running from the US any more than they’re running to China. Rather, in hedging against a less predictable USA, they’re naturally trying to shape a more assertive China, even if such an endeavour is glacial if not futile.
Third, those first points above complicate how the world now grapples with what’s now our second China Shock (this higher-tech export flood; the first shock was China’s post-WTO flood of cheaper stuff btw).
An effective response to this latest Shock might’ve been banding like-minded economies to then jointly negotiate with China — but that idea (eg, the CPTPP trade pact) fell to the same populist forces fanned by the first China Shock. So the result is we’re now literally watching the opposite strategy play out, with Western leaders like Merz, Starmer, Carney, and Trump (in April) each traipsing to China individually, trimmed leverage in hand.
Sound even smarter
- Back in October, German foreign minister Johann Wadephul cancelled his China trip after Beijing authorities ghosted him, agreeing to only one of his requested meetings.
