Germany’s Merz Targets New Business Deals at China’s Hangzhou Tech Hub
German Chancellor Friedrich Merz has turned his focus to China’s booming technology sector as he arrived in the eastern city of Hangzhou, a major innovation hub, on the second day of his first official visit to the country. The visit underscores Berlin’s attempt to balance deep economic engagement with Beijing against rising political and trade tensions between China and Western economies.
Merz travelled from Beijing to Hangzhou on Thursday, accompanied by a high-level delegation of German business executives, as part of a broader push to secure new contracts, protect market access for German firms, and address mounting trade imbalances between Europe’s largest economy and the world’s second-largest.
Hangzhou: China’s Rising Technology Powerhouse
Hangzhou, a city of roughly 12 million people in Zhejiang province, has emerged as one of China’s most important technology and innovation centers. Often referred to as China’s “Silicon Valley,” the city is home to major players in artificial intelligence, robotics, e-commerce, and advanced manufacturing.
During his visit, Merz was scheduled to tour several leading firms, including Germany’s Siemens Energy and Unitree, a fast-growing Chinese company specializing in humanoid and quadruped robots that are increasingly drawing global attention.
Hangzhou also hosts major Chinese tech giants such as Alibaba and artificial intelligence firm DeepSeek, reinforcing its status as a focal point for foreign executives seeking partnerships in China’s digital economy.
For Merz, the stop in Hangzhou highlights Germany’s interest in tapping into China’s rapid advances in AI, automation, and green technologies — sectors seen as critical to Germany’s industrial future.
Automakers and Industry Leaders in Tow
Merz’s delegation includes senior executives from some of Germany’s most powerful corporations, notably automotive giants Volkswagen, BMW, and Mercedes-Benz.
Before leaving Beijing, Merz visited a Mercedes-Benz production facility in the Chinese capital, where he test-drove a self-driving vehicle — a symbolic gesture highlighting the deep integration of German carmakers into China’s electric and autonomous vehicle ecosystem.
China remains the single largest market for German automakers, even as competition from rapidly expanding Chinese electric vehicle manufacturers intensifies.
Trade Ties Under Pressure
Merz’s China trip comes at a sensitive moment in global trade. China overtook the United States last year to become Germany’s largest trading partner, cementing an economic relationship built over decades.
However, the partnership is increasingly strained.
Germany’s trade deficit with China reached a record 89 billion euros ($105 billion) last year, fuelling concerns among German manufacturers that Chinese companies — often backed by state subsidies — are flooding European markets with cheaper products, particularly in electric vehicles, batteries, and industrial equipment.
In Beijing, Merz stressed that his government wants to “improve and make fair” economic cooperation between the two countries, calling for better market access and a more level playing field for German firms operating in China.
Meetings With China’s Top Leadership
On Wednesday, Merz met with Chinese Premier Li Qiang, followed by talks with Chinese President Xi Jinping.
Following those discussions, Merz announced that China had agreed to purchase up to 120 Airbus aircraft, a significant boost for Europe’s aerospace sector and a sign that Beijing is seeking to maintain strong economic ties with Europe amid strained relations with Washington.
Xi and Merz both emphasized their commitment to developing closer strategic relations, with the Chinese leader saying he was willing to take ties with Germany to “new levels.”
Geopolitics on the Agenda: Ukraine and Taiwan
Beyond trade, the talks also addressed major geopolitical flashpoints.
Merz reiterated Germany’s position that any future “reunification” with Taiwan, which China claims as its territory, must be achieved peacefully — a stance aligned with broader European Union policy.
The German leader also urged Beijing to use its influence with Russia to help bring an end to the war in Ukraine, reflecting growing frustration among European governments over China’s perceived reluctance to pressure Moscow.
“We know that signals from Beijing are taken very seriously in Moscow,” Merz told reporters, suggesting China could play a pivotal role in any future diplomatic breakthrough.
Following the meetings, Germany and China issued a joint statement supporting efforts toward a ceasefire and lasting peace in Ukraine, while also reaffirming commitments to fair competition, mutual market access, and resolving disputes through dialogue.
Europe Navigates a Shifting Global Order
Merz’s visit places Germany among a growing list of Western leaders engaging directly with Beijing amid uncertainty in global trade. In recent months, leaders including UK Prime Minister Keir Starmer, French President Emmanuel Macron, and Canadian Prime Minister Mark Carney have all travelled to China.
The renewed diplomatic outreach follows the fallout from tariffs imposed by the Trump administration, which disrupted long-established trade relationships and pushed European economies to reassess their global partnerships.
A Delicate Balancing Act
For Germany, the challenge is clear: preserve access to China’s vast market while protecting domestic industries, reducing strategic dependencies, and aligning with European security interests.
Merz’s visit to Hangzhou — with its focus on technology, innovation, and future industries — reflects Berlin’s belief that disengagement from China is neither realistic nor desirable. Instead, Germany is betting on a strategy of selective cooperation, firmer trade rules, and sustained political dialogue.
As global competition intensifies and economic blocs harden, the outcome of visits like Merz’s could shape not only Germany–China relations, but the broader direction of Europe’s engagement with Beijing for years to come.
