Germany reportedly plans to lobby the EU to "increase taxes on China," experts say: Merz is "prescribing the wrong medicine" for his own problems

"Germany will lobby the EU on China policy and may seek to impose more tariffs"—under this headline, Bloomberg reported on the 14th local time that the German government is preparing a "far-reaching economic security measure" aimed at "protecting strategic industries from Chinese influence," which may include imposing new tariffs on hybrid cars. The report also quoted sources as saying that Berlin is cooperating with Paris to gain support from other EU member states at the summit in Brussels in October, in preparation for subsequent EU-China talks. Previously, the Chinese side has repeatedly emphasized that the EU should face up to its own problems, that China is not the root cause of these issues, but can actually be a partner to help the EU solve them. On the 15th, a Chinese scholar told Global Times that Merz is facing some pressure from the domestic industry, which believes a tougher stance on China in economic and trade matters should be taken, but this approach is seriously flawed—choosing the wrong cure for its own problems.

Bloomberg reports that, according to sources, the German government is sorting out areas where there are vulnerabilities regarding China and is evaluating responses, including potential proposals such as new tariffs, requirements to establish joint ventures, strengthened investment reviews, and tighter export controls. The Merz administration plans to secure cabinet approval by October 14 and then seek wider support within the EU. Bloomberg claims this indicates a shift in German policy towards China, with a tougher tone. The article asserts that the EU's trade deficit with China exceeds 1 billion euros per day, while Germany's industrial decline has already led to tens of thousands being laid off.

The German Ministry of Economic Affairs declined to comment on Bloomberg's report. Some German media republished the story. Not long before this news emerged, on the 13th, Germany’s Handelsblatt and other media cited a German Economic Institute (IW) analysis showing that in the first half of this year, new German investment in China reached 5.6 billion euros, an increase of about one third year-on-year. According to Handelsblatt, more and more German companies are now using local profits to fund their investments.

On the one hand, the German government is reported to be responding to China with tougher economic and trade policies; on the other hand, German companies are increasing their investments in China. In the view of Chinese scholars, this is not contradictory. On the 15th, Jiang Feng, a researcher at Shanghai International Studies University and president of the Shanghai Society for Regional and National Studies, told Global Times that Merz is under considerable pressure from industry at home—as Germany’s automotive, chemical, and machinery industries face difficulties and exports to China have fallen, industries have urged the government to adopt a tough policy. Since taking office, Merz has been pushing for the so-called "de-risking," not only aimed at China but now also at the United States.

Jiang Feng said that some of the data cited in the Bloomberg report do not stand up to scrutiny, such as the claim that the EU's trade deficit with China reaches 1 billion euros daily. This figure does not include the EU’s surplus in services trade with China or European companies' exports from China back to Europe. Using such data as the basis for making China trade policy would be a serious mistake.

Ministry of Commerce spokesperson Huang Ling recently stated that China emphasizes that China-EU consultations at all levels should adhere to the positioning of a stable and balanced key China-EU trade partnership, insist on addressing mutual concerns equally, and that it is unacceptable to unilaterally raise prices, set conditions, or threaten with market closure. Huang Ling also mentioned: protectionism is a dead end, and win-win cooperation is the right way forward.

Zhou Mi, a researcher at the Ministry of Commerce’s Research Institute, told Global Times on the 15th that the pressure Merz is currently facing has led him to respond to voter concerns on a political level, but this "tough" choice may not actually benefit Germany—what German companies need are real cooperative opportunities. Regarding the Bloomberg report, Zhou Mi believes that China's position will not change because of it, and it will continue to uphold multilateralism and free trade. China and Germany are broadly complementary and have a basis for synergy; they can resolve concerns through cooperation. China also hopes Germany will play a more positive role within the EU, promoting deeper China-EU cooperation and mutual trust, as cooperation is far more effective than confrontation.