Beijing: Germany’s Finance Minister and Vice-Chancellor Lars Klingbeil arrived in Beijing on Sunday for a high-profile visit aimed at addressing growing trade imbalances and supply-chain vulnerabilities between the two economic powers. The visit marks the first major engagement by Germany’s new coalition government with China and underscores Berlin’s increasing focus on economic security amid deepening dependence on Chinese markets.
According to German government data, China has surpassed the United States as Germany’s largest trading partner in the first eight months of 2025. However, the trade relationship is showing signs of strain: German exports to China have fallen by roughly 13.5 percent year-on-year, while imports from China have risen by about 8.3 percent. Analysts project Germany’s trade deficit with China could reach a record €87 billion by the end of the year, intensifying calls in Berlin to reassess economic engagement with Beijing.
The imbalance has raised alarms in German industry, particularly in strategic sectors such as rare-earth minerals, automotive components, and high-tech manufacturing, where dependence on Chinese suppliers exposes local factories to potential disruption. Policymakers and business leaders are now exploring avenues to diversify supply chains and reduce single-source reliance.
During his stay, Klingbeil is scheduled to meet with He Lifeng, China’s Vice Premier, under the framework of the “German-Chinese Financial Dialogue,” a forum established in 2015. Key topics of discussion are expected to include China’s export controls on rare-earth elements, subsidies and overcapacity in sectors like steel and electric vehicles, and German strategies to maintain industrial competitiveness while managing geopolitical risks.
In a statement before departing for Beijing, Klingbeil stressed the importance of these discussions:
“Access to critical raw materials and the reduction of Chinese overcapacity in sectors such as steel and electric mobility are of great importance for the economy and jobs in Germany.”
Accompanying the finance minister are senior officials from the German central bank as well as representatives from leading banks and insurance firms, highlighting the strategic significance of the mission for Germany’s broader economic and financial policy.
The visit coincides with an ongoing review of Germany’s China strategy. A parliamentary expert commission was recently convened to evaluate the country’s approach to trade with China, reflecting growing concerns over economic exposure and national security. Analysts have noted that decisive political action will be essential if Germany is to implement meaningful reforms in industrial policy and supply-chain diversification.
Industry observers point to specific cases, such as the Nexperia dispute involving a Dutch automotive-chip supplier affected by Chinese export controls, as evidence of how commercial entanglements with China can quickly evolve into geopolitical challenges. This has intensified the push in Germany to safeguard critical sectors from undue foreign influence while maintaining constructive economic engagement.
Germany now faces the delicate task of balancing economic cooperation with China against growing security and supply-chain risks. Policymakers and industry leaders are closely watching how Beijing responds to German concerns regarding rare-earth access, overcapacity in strategic sectors, and fair trade practices. The outcomes of Klingbeil’s visit may shape not only Germany’s industrial strategy but also the broader European approach to managing China’s economic influence.
As global supply chains wobble and trade gaps widen, Klingbeil’s trip signals a critical moment for German-Chinese economic relations, combining diplomacy with urgent strategic recalibration to protect Germany’s industrial base and economic future.