In Berlin, the change in tone is now noticeable even in government corridors: Germany, cautious for years in its trade dealings with Beijing, is beginning to consider the possibility of a much tougher European response against Chinese exports.
On the Brussels table are heavier tariffs, tools to counter overproduction, and new industrial defense measures that until recently would have been considered unthinkable in the manufacturing heart of Europe. According to Handelsblatt, even in the German capital the belief is growing that China’s economic strategy is directly hitting the core of European production.
THE REASONS FOR THE GERMAN MINI TURNING POINT ON CHINA
The discussion intertwines with the official trip to China by Economy Minister Katherina Reiche, while within the federal government a more assertive line towards Beijing is taking shape. In government circles cited by Handelsblatt, a document promoted by France, Italy, the Netherlands, and Lithuania, designed to strengthen the European Union’s trade tools against what are defined as “systemic and structural industrial overcapacities,” is viewed positively. Spain, initially among the signatories, later withdrew its support amid the internal political difficulties of Prime Minister Pedro Sanchez, but the political signal sent by the major European economies remains clear.
For Berlin, however, the China dossier continues to be a delicate balancing act. Germany is the European country most exposed to Chinese industrial competition and at the same time one of the most dependent on the People’s Republic market. Key sectors of the German economy, from automotive to chemicals to mechanical engineering, must contend with Chinese products that are increasingly competitive in price and quality. At the same time, groups like Volkswagen and BASF maintain enormous interests in China, making any diplomatic hardening potentially risky.
In recent years, the German government has oscillated between trade caution and calls to reduce strategic dependencies. Now, however, pressure from European industry and the slowdown of the German economy are changing the picture. Economists openly speak of a new “Chinese shock,” with Germany identified as the European epicenter of the impact caused by the wave of imports coming from China.
BRUSSELS PREPARES COUNTERMEASURES
In Brussels, the debate has been more advanced for some time. European Commission President Ursula von der Leyen is discussing with commissioners a new package of trade interventions, particularly supported by European Industry Commissioner Stéphane Séjourné and Trade Commissioner Maros Sefcovic. The goal is to strengthen European defenses against Chinese production overcapacities.
“The conviction that Europe must act more firmly is spreading more and more,” Séjourné told Handelsblatt. The central issue concerns the Chinese economic model, based “on export expansion through public subsidies, high production capacities, and a reduction in import dependence.”
According to a recent study by the think tank Center for European Reform, also cited by the Düsseldorf daily, the economic damage to Europe and Germany is now “measurable.” Between 2019 and 2025, the document circulated among European governments claims, the continent’s industry would have lost about one million jobs. The concern is not only the loss of market shares in emerging countries but also “the growing presence of Chinese companies directly in Europe.”
Among the hypotheses discussed in Brussels are higher tariffs and especially trade defense procedures applied to entire industrial sectors, without having to open lengthy product-by-product proceedings. This is the case for electric cars: today, for example, Brussels applies a 17% tariff to BYD, while the United States and Canada have introduced 100% tariffs. It is no coincidence that countries like Hungary and Germany itself are seen by the Chinese car manufacturer as soft spots for entry into Europe.
THE BERLIN DILEMMA
The most ambitious proposal is that of a new European “resilience instrument,” designed to “intervene when trade distortions threaten production capacities considered strategic for the Union.” The mechanism could include additional tariffs or import quotas, leveraging exceptions provided by the World Trade Organization (WTO) for reasons of economic security.
However, compliance with WTO rules represents one of Germany’s main cautions. Berlin, while sharing the general approach of the European document, does not intend to formally join the proposal for now, Handelsblatt states. The Ministry of Economy believes that measures that are too extensive could produce side effects that are difficult to control, including the risk of Chinese retaliation.
Economist Gabriel Felbermayr, director of the Austrian Institute for Economic Research (Österreichisches Institut für Wirtschaftsforschung, Wifo), called the European non-paper a “useful attempt” to strengthen trade protection tools, “provided it respects international law.” But Felbermayr himself urges avoiding overly radical protectionist drifts: “A constructive offer to China remains the right choice, not building walls,” he told Handelsblatt.
In the relationship with China, this is ultimately still the point that today crosses the German debate: defending European industry without breaking the economic relationship with the main Asian trading partner. A fine line that Berlin, more than any other European capital, tries to maintain.
