German industry presses Merz for tougher China policy

German industry is urging Chancellor Friedrich Merz to adopt a more forceful stance towards China, citing unfair competition and state subsidies. This push comes as the country's trade deficit with China widened significantly last year, and as German companies face growing challenges from Chinese rivals both domestically and in the European market.

Despite some mixed messages from Chancellor Merz's coalition, there is a growing consensus that Europe needs more robust trade-defence measures against China. Volker Treier, head of foreign trade at the German Chamber of Commerce and Industry, emphasized the need to discuss the issue with China and stated that if subsidies or unfair competition are confirmed, it would be a significant concern.

Companies such as Volkswagen, which has seen BYD overtake it in China, and Siemens Energy have called for stronger protection measures, including the application of existing WTO and EU trade policy instruments. However, China maintains that its subsidies and currency valuation are not unfair practices. The situation highlights the delicate balance that European companies must strike while competing with Chinese firms, while also avoiding escalating trade conflicts.