Merz Leads German Business Delegation to China, Highlighting Auto Sector's Deep Dependence on China

In early 2026, German Chancellor Friedrich Merz visited China accompanied by top executives from major German automakers including Volkswagen, Mercedes-Benz, and BMW, with automotive cooperation as the central agenda. BMW signed a battery data memorandum with CATL, while Mercedes-Benz deepened its intelligent driving collaboration with Momenta—highlighting German automakers’ heavy reliance on China’s electrification technologies and supply chains. The two sides also reached multiple agreements on localized R&D and green manufacturing, which were incorporated into the outcomes of the bilateral summit between the Chinese and German premiers. Data shows that Sino-German trade reached €251.8 billion in 2025, with China remaining Germany’s largest trading partner for several consecutive years, resulting in a trade deficit of nearly €90 billion for Germany. During the same period, German brands saw their average market share in China decline by 33%, while Chinese electric vehicles surged in the German market—BYD delivered over 23,000 units in Germany in 2025, a 706% year-on-year increase. Despite the German government’s emphasis on a “balanced relationship,” businesses have voted with their investments: German direct investment in China rose by 70% in 2025, hitting a five-year high. The German automotive “Big Three” continue to expand their presence in China, underscoring that their electric transition cannot succeed without access to China’s market and technology. Sino-German automotive cooperation has shifted from the old model of “market for technology” toward “co-creation,” yet the balance of influence is increasingly tilting toward China.