Eamon Dyas
Germany began sacrificing its future prosperity in 2008 when it was convinced by the EU Commission to agree to the Commission’s proposal to “unbundle” its energy sector – a move that effectively ceded national control over its energy sector and one which the Commission went on to use (via its trade competencies under the EU Treaty) to constrain the future use of Russian energy. (For details see the third article in my series on “Ukraine and Russian Energy” in Labour Affairs) https://labouraffairs.com/2025/07/01/the-power-of-the-european-commission/. This constriction increased gradually over the years until by the time that Russia came into direct military conflict with Ukraine in 2022 the final severance was not felt as traumatically as if it had come suddenly.
Are there elements within the EU that are now attempting a similarly damaging move when it comes to Germany’s trade links with China? The EU can’t be unaware of the impact on Germany of such a move in the same way that it was not unaware of the damage its policy of restricting and then banning cheap Russian energy was to have on Germany in 2008.
But is there a pattern emerging here when it comes to the EU and Germany? Can this most recent iteration of the trend – if trend it is – be anything to do with the manner in which the EU’s anti-Russian strategy has led to the rise of the likes of Poland?
What may have begun as a straightforward positioning of the EU in its hostility towards Russia (and the necessary supporting and resourcing of the likes of Poland and the Baltics) failed to take account of the fact that these countries had their own inner momentum and national aspirations. Those national aspirations reflected a growing assertion of their recently liberated bourgeois class with ready-made anti-Russian ideologies to provide the perspective that fitted the anti-Russian perspective of the EU at the time.
However, in providing the huge capital investment necessary to buttress these countries’ hostility to Russia while at the same time inflating the danger that Russia posed to Europe the EU has fed the appetite of the growing economic ambitions of these countries in their own right. The result has been that what had previously seemed to be an eternal hierarchical structure within the EU no longer looks so permanent and the deference towards Germany as the power-house of Europe is dissipating as fast as its manufacturing strength.
Are we now witnessing the beginnings of the hungry glow in the eyes of the younger beasts in the European pack as they gather around the aging and declining strength of its old leader? And is Germany wakening up to the dangers that are emerging from within the EU? It remains to be seen. But we have seen recently a proposal from the German Foreign Minister Johann Wadephul stressing that an EU with over 33 members could not continue operating under rules designed for a smaller bloc – a position that is shared with a number of the “older” members of the EU. Then there is this from Germany (see article from Euronews below) which would indicate that its acquiescence in 2008 is no longer a feature of Germany’s willingness to facilitate what is being sold to it in 2026 as something that is in the interests of the wider EU. If this is the case then it would indicate that there are structural fissures opening up which could eventually bring the whole edifice down.
Germany resists EU members’ push for a tougher stance on China
German Trade Minister Katherina Reiche is in Beijing this week seeking to strengthen industrial ties with China, even as several EU member states push Brussels to take a tougher line against the Asian giant over overcapacities.
German Trade Minister Katherina Reiche is travelling to China from Tuesday to Friday as Berlin’s trade deficit with Beijing continues to deepen.
The trip comes two days after several of the EU’s largest economies – France, Spain, Italy, the Netherlands, as well as Lithuania – issued a non-paper urging the EU to crack down on Chinese overcapacity and unfair trade practices.
Berlin, however, did not endorse their call.
Germany remains the main chokepoint in the EU’s strategy towards China. While Euronews previously reported that the publication late last year of Germany’s trade deficit with Beijing marked a turning point for the EU executive, which is trying to sharpen its trade defence tools, Germany continues to favour cooperation with the Chinese.
In March, German Chancellor Friedrich Merz called for a trade agreement with Beijing. Brussels pushed back against the idea.
“There are a number of concerns and real challenges that the European Union has consistently expressed to China that we need to see them meaningfully address before we can even talk about any future agreements or anything like that,” the Commission’s deputy chief spokesperson, Olof Gill, said at the time.
Even with a record €87 billion trade deficit with China, Berlin hopes Beijing will keep its market open to German industry, despite the obstacles faced by EU businesses in China and the Asian giant’s strategy of reducing its dependence on foreign products.
Access to China’s market
The main objective of Reiche’s visit this week is to discuss potential economic cooperation. According to the German government, the strategy is to explore future opportunities for collaboration while maintaining dialogue with the Chinese leadership.
Despite a steadily growing trade deficit, China remained Germany’s most important trading partner in 2025. According to the Federal Statistical Office, bilateral trade volume reached €250 billion. Around 5,200 German companies operate in China, making the country one of the most important foreign markets for Germany’s automotive, mechanical engineering and electrical industries.
During the trip, Reiche is expected to hold political talks, attend a business forum and visit local companies. She will be accompanied by a business delegation representing around 40 companies. Discussions are also set to focus on the development of energy technologies.
“We hope the visit will help to transfer the insights gained on the ground into the political discussion in Berlin and to further develop bilateral exchange,” said Oliver Oehms, Executive Director of the German Chamber of Commerce in China.
In a survey published in May by the chamber, 51% of German companies operating in China supported policies favouring partnerships with Chinese companies, while 42% backed the “strategic” use of knowledge gained through such partnerships.
But these sectors are also increasingly under pressure, as Chinese competitors benefit from extensive state subsidies.
According to a report published in May by the EU think tank Centre for European Reform, the growing concentration of global car, machinery and chemicals production in China could weaken innovation in traditional manufacturing hubs and increase Beijing’s leverage over Berlin through the threat of supply disruptions, similar to its blockade of rare earth exports in 2025.
The report added that demand generated by Germany’s fiscal stimulus after easing its debt brake could end up boosting Chinese imports rather than supporting Berlin’s domestic industry.
German exports to China fell by 9.7% year-on-year, while imports of Chinese goods such as electronics, electric vehicles and components rose significantly by 8.8%.
“China has already eaten much of German industry’s lunch and is preparing to start on dinner,” the report said.
Labour Affairs 