【By Observer Net, Wang Kaiwen】Amid the escalating tensions in Sino-European trade relations due to issues such as rare earths and NXP Semiconductors, it has been reported that the German government is preparing to adjust its trade policy with China under the guise of "security".

According to a draft proposal seen by Reuters on November 8, the German government plans to re-evaluate its trade policy with China, covering areas such as energy, raw material imports, and Chinese investments in Germany's critical infrastructure, and establish an expert committee to report to the German parliament.

The report pointed out that this plan comes at a time when trade tensions between the world's second and third largest economies are intensifying.

According to the draft proposal, the committee will review "the security-related trade relationship between Germany and China" and make recommendations to the government. It was reported that the proposal was jointly put forward by the conservative alliance led by German Chancellor Merkel and its coalition partner, the Social Democratic Party (SPD).

This proposal is likely to be approved next Friday (November 14), after which a committee composed of more than a dozen scholars, industry associations, unions, and think tank experts will also be established.

Reuters said that for decades, Germany has regarded China as a "natural ally" in promoting an open global trade system, which helped Germany's manufacturing industry flourish. However, a series of recent shocks, including China's enhanced control over rare earths, have raised concerns in Germany about the supply chain for key automotive industries, prompting Germany to rethink its trade relationship with China.

According to the report, the new committee will submit two reports to the German parliament annually.

"The goal of this committee is to examine from legal, economic, and political perspectives whether adjustments to foreign trade rules are needed," the draft proposal stated. In addition, the committee will also study other countries' trade relationships with China.

Local time February 18, 2025, Volkswagen factory in Emden, Germany. Oriental IC

Facing the growth of China's industrial development, the US and Western countries have continuously strengthened protectionist measures, taking a historical step backward, and the German government is not hesitant to deviate from its traditional free trade path.

Earlier this week, Merkel stated her support for increasing tariffs on Chinese steel to protect domestic industries in distress. The Financial Times pointed out that this marked a complete turnaround from Merkel's stance while in opposition, when she opposed the EU's imposition of tariffs on China.

At the same time, Merkel admitted that the protectionist position differs from what Germany had previously considered correct, but he insisted that today is different from the past and that their market and manufacturers must be protected.

On November 7, Joachim Nagel, President of the German Central Bank and a member of the European Central Bank's Executive Board, claimed that Europe needs to make China clear that its actions are being closely monitored, and that Europe's core industries must be protected. He also threatened that if the trade relationship with China continues to deteriorate, Europe should consider taking corresponding retaliatory measures.

Last month, German Foreign Minister Annalena Baerbock canceled her visit to China temporarily, citing the "current inability to arrange enough meetings in China." The public believes this indicates that the tension between the two sides on trade and security issues is rising. This move has also caused widespread concern in Germany.

Baerbock later tried to clarify on October 27 that he had only "postponed" the visit to China, not canceled it, and would soon contact China and reschedule the trip.

Germany is the largest economy in Europe, and China is the largest economy in Asia. Since the beginning of this year, China has once again become Germany's largest trading partner.

According to preliminary statistics from the German authorities, from January to August this year, China replaced the United States as Germany's largest trading partner. The trade volume between Germany and China reached 163.4 billion euros, slightly higher than the 162.8 billion euros between Germany and the United States. The main reason for this change is the U.S. restarting tariff policies, leading to a decline in Germany's exports to the U.S., while Germany's imports from China have significantly increased.

Analysts point out that this trend reflects the limitations of Europe's "de-risking" strategy towards China, and China's trade influence on Germany has returned to its peak.

Currently, the German economy has faced three consecutive years of stagnant growth.

On October 27, Gao Jia Kun, a spokesperson for the Chinese Ministry of Foreign Affairs, stated that China always views and develops Sino-German relations from a strategic perspective and with a long-term vision. As major powers and the world's main economies, China and Germany should cooperate mutually beneficially. Especially under the current circumstances, both sides should adhere to mutual respect, equality, and win-win cooperation, and promote bilateral relations to develop along the correct track.

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