German Chancellor Friedrich Merz has said he can imagine a trade deal with China in the future, signaling a new softening stance towards Beijing in European capitals. “We have set quite a lot in motion when it comes to trade policy. I can also envisage further agreements, for example in the longer term, an agreement with the People’s Republic of China,” Merz said in the German parliament. Merz’s remarks underscore how surging trade and geopolitical tensions with Washington are nudging parts of Europe towards a more accommodating stance on China, even as the EU insists the conditions for any formal deal remain far from being met. Beijing has been putting the feelers out regarding a potential trade pact with the 27-member union for months, as several of EU leaders and ministers have travelled to the Chinese capital. “We now need strategic partnerships around the world in order to strengthen ourselves, especially our exports,” Merz added, in comments sparked by a trade deal agreed between the EU and Australia last week.
“This is quite a stunning statement,” said Noah Barkin, Analyst of EU-China relations at the Rhodium Group, about Merz’s comments. “Beijing has been pushing the idea of a free-trade agreement with the EU because it wants to keep the European market open for its goods.” The Chinese market, meanwhile, is gradually closing down to EU and especially German exports as part of an explicit Chinese policy of import substitution. According to sources in Brussels, there were no immediate plans to launch free-trade talks with China.
The EU asserts that Beijing is ignoring its complaints about the opacity of China’s state subsidies and what it describes as the resulting industrial capacity and surge in cut-price exports to Europe. Beijing’s export controls on rare earths, meanwhile, have become a spoiler in the relationship since their imposition last year. In a speech in Australia, European Commission President Ursula von der Leyen said the bloc “cannot and will not absorb China’s export-led growth model and its industrial overcapacity. Both the threat to our supply-chain security and the shock to our industrial base need urgent responses,” she added. In the first two months of 2026, China’s trade surplus with the EU expanded by 40%, and 139% in the case of Germany, compared with a year earlier.
Meanwhile, Chinese Premier Li Qiang and Dutch Prime Minister Rob Jetten had a phone conversation and Dutch Minister of Foreign Trade Sjoerd Sjoerdsma met Chinese Commerce Minister Wang Wentao at a WTO ministerial meeting in Yaounde, Cameroon, in an effort to solve the Nexperia issue. Sjoerdsma posted on social media: “Had a constructive conversation with Chinese Minister Wang Wentao at #WTOMC14. We discussed our strong trade & investment partnership and WTO reforms. We agreed to hold economic and trade consultations in China soon. I will use this opportunity to lead a trade mission there,” he said, as reported by the South China Morning Post.
