Germany is considering steps to shrink its €360 billion trade deficit with China, a gap that underscores Europe's deepening economic reliance on Beijing and raises the risk of market turmoil and diplomatic friction, according to officials familiar with the discussions.
The scale of the imbalance
At €360 billion, the deficit means Germany imports far more from China than it exports there. That gap has grown steadily over the past decade as Chinese manufacturers moved up the value chain, supplying not just consumer goods but also machinery, electronics and components critical to German industry. The imbalance has become a political flashpoint in Berlin, where lawmakers question whether the relationship is fair or sustainable.
Why Berlin is concerned
German officials worry that the persistent deficit leaves the economy exposed to disruptions in supply chains and to potential Chinese leverage. Market volatility is a real risk — a sudden shift in trade policy by either side could hit German manufacturers hard. Strained diplomatic ties between the European Union and China have only added to the urgency, with Berlin now viewing the deficit as both an economic and a strategic problem.
Broader EU implications
The deficit is not just Germany's problem. It highlights a wider EU struggle to reduce dependence on Chinese imports and to compete in sectors where China has gained an edge. Other member states face similar, if smaller, deficits. Any action Germany takes — whether tariffs, subsidies for domestic production, or new trade agreements — could reshape the bloc's approach to relations with Beijing.
What comes next
Berlin has not yet announced specific measures. But the fact that it is openly discussing a response marks a shift from earlier positions that prioritized low-cost Chinese goods over balance. Officials say any solution will need to be coordinated with EU partners to avoid fragmentation. For now, the question is whether Germany can narrow the gap without triggering a full-blown trade dispute.
