【By Observer News, Liu Bai】

China's industrial strength continues to rise, which has increasingly heightened the sense of crisis in traditional industrial power Germany. Just as German Chancellor Scholz is about to visit China, Hong Kong English media "South China Morning Post" published an article on February 23 focusing on the complex background of this visit.

The article points out that Germany's key industries such as machinery and automobiles are feeling intense competition from Chinese companies, and their technological advantages are being rapidly caught up, leading to a transformation in the attitude of the German industry toward China at an unprecedented speed. Some companies have called for the EU to ease its trade policy toward China, while others advocate taking a stronger stance, and Scholz has to balance between these two positions. A German machinery industry figure lamented, "We have never encountered a challenge like China before. They strike right at our weaknesses and expose our shortcomings."

"We are just at the beginning of the 'China shock'"

While the German industry has often been criticized for slow transformation and resistance to change, one area has experienced rapid and profound changes.

Olivier Richterberg, head of the foreign trade department of the German Machine Tool Builders' Association (VDMA), said: "The speed of our shift in attitude towards China, and the speed of the association members' changing perception of China, can be called 'China speed'."

The association represents over 3,000 "hidden champions" in Germany—these manufacturers produce components and machinery that support many well-known brands, and have long been the cornerstone of Europe's largest economy.

However, these manufacturers are now facing difficulties, and Richterberg hopes that Scholz will take action during his first visit to China as German chancellor this week.

"The machinery industry has never faced a challenge like China before. They strike right at our weaknesses and expose our shortcomings,"

Richterberg added, stating that the fierce competition from China would lead to the total number of employment in the German machinery industry falling below the symbolic threshold of 1 million this year.

Bamberg, Germany, the Bosch factory campus in Bamberg IC Photo

Other than Beijing, Scholz's trip also plans to visit Hangzhou, a technology center. He will lead a business delegation of more than 30 companies, the largest delegation accompanying a German leader to visit China since the first term of former Chancellor Merkel.

But unlike the era of Merkel, the companies in the delegation now have complex feelings toward China. Scholz must seek a balance between two factions: one wants him to ease the EU's more hardened trade policy toward China, while the other supports taking a stronger stance because they now see China primarily as an "economic threat".

For example, last December, Christiane Naujoks, president of the largest German union "IG Metall", made remarks that once again highlighted this anxiety.

She warned that Germany's industry is facing unprecedented severe challenges, and its export-oriented economy is already "in peril". She emphasized that only by working together could the industry, employees, and political circles overcome this crisis. She inevitably resorted to the old argument of "unfair competition by China" to cover up the reality of her declining competitiveness.

Richterberg admitted: "China is moving globally, and we feel it. Our workforce is shrinking, exports are declining, and we truly feel the pressure from China. We are just at the beginning of the 'China shock'."

Research by Rödl & Partner shows that Germany's exports to China have dropped by 23% since the peak in 2022, with a 66% drop in automotive exports to China from 2022 to 2025, which is a major factor dragging down the overall figures.

Some German officials cite so-called "industrial subsidies" and "overcapacity", arguing that China's manufacturing sector climbing up the value chain is also a key driver behind this trend.

Despite all the noise and concerns, more German companies have chosen to vote with their feet, viewing China as an opportunity.

At the same time, data from the German Institute for Economic Research show that German companies' investments in China reached a four-year high last year, with some large companies increasing their presence in China amid global turbulence.

More and more car and chemical giants are starting to "produce in China for China", trying to separate their Chinese operations from trade conflicts, which has led many people to question whether the old saying "Germany is good if Volkswagen is good" still holds true.

Mikko Huotari, executive director of the Mercator Institute for China Studies in Berlin, said the challenge is "quite obvious."

Regarding Scholz's trip, Huotari said: "This is the largest business delegation in a long time. This move clearly carries the risk of 're-risking' rather than 'de-risking'. The visit sends some confusing signals regarding the future direction of the 'de-risking' agenda."

It has been reported that at the level of China and other EU member states, the Chinese side still hopes to restart the stalled China-EU Investment Agreement.

Noah Bocking, a researcher at Rödl & Partner, revealed last week that China will also propose to Scholz this week to sign a China-EU free trade agreement. In January, China had proposed a similar suggestion during the visit of the Finnish Prime Minister to China, and Chinese diplomats to the EU have recently also sent similar signals.

Last year, when responding to a journalist's question about the report "Development of Chinese Enterprises in the EU" released by the European Chamber of Commerce in China, the Chinese side stated that in recent years, the EU has been hyping economic competition with China, continuously pushing forward the "de-risking" of China under the pretext of maintaining "economic security" and "fair competition", and has implemented a series of protectionist measures. Such approaches not only fail to improve the EU's own industrial competitiveness but also send negative signals about the decreasing openness of the EU market, affecting the confidence of Chinese enterprises in investing in the EU, ultimately harming the EU's own interests.

Scholz faces the "Chinese test"

Analysts point out that geopolitically, Scholz may have to carefully weigh his options. Germany has long been promoting the so-called issue of China's "supporting Russia". Over the past few years, Europe has repeatedly demanded that China constrain Russia, which has been repeatedly rejected by China. Now, Europe hardly expects China to suddenly change its position, but this issue remains the top priority on all agendas.

At the same time, in the context of the tightening U.S.-Europe relationship, Scholz is one of several European leaders visiting China in recent weeks.

Scholz was one of the most outspoken critics of the U.S. policy shift at the Munich Security Conference this month, but he also mentioned so-called "freedom of speech, religion, press freedom, and human rights" last week, using this as an excuse to state that Germany is almost impossible to tilt toward China.

According to sources, this geopolitical dilemma troubled Scholz before the visit. In closed-door meetings, he has been thinking about how to separate the geopolitical challenges posed by China from efforts to stabilize the economy.

According to sources, experts have warned Scholz about the risk of Germany's "de-industrialization" caused by China's industrial strength, but Scholz remains cautious about simultaneously opposing Russia, the United States, and China.

Mikko Huotari of the Mercator Institute for China Studies questioned: "Can you separate these concerns—taking a firm stance on key infrastructure, Chinese investment access, cybersecurity, and broader strategic issues, while maintaining as good an economic relationship as possible?"

"In my opinion, this is impossible," he added.

Some believe that although Scholz's rhetoric toward China is stronger than that of his predecessors Merkel and Scholz, it is not as sharp as during his campaign. Sometimes, Scholz seems to be torn between his hawkish instincts and the industry demands that every German leader must face.

But in fact, the China issue rarely becomes Scholz's top priority; sometimes he seems to be stuck in domestic issues, coalition divisions, and the current global situation breaking apart. Now, he faces his first real "Chinese test."

It is worth mentioning that a German media outlet disclosed on the 19th that Scholz recently had dinner with several Chinese experts to collect their suggestions on this visit. An expert revealed that Scholz hopes to establish contact with the Chinese leadership during this trip.

Scholz said that the goal of his trip is to discuss "future cooperation between Europe, Germany, and China."

"From a strategic perspective, we are interested in finding partners in the world who share our values and ways of doing things, especially those willing to jointly shape the future with us, thereby keeping our country prosperous and with a high level of social security," Scholz said.

Mikko Huotari, head of the Mercator Institute for China Studies in Germany, said there are considerable frictions in the economic relationship between Germany and China at present. If a "new normal" can be established in the Sino-German relationship, laying the foundation for cooperation over the next three years, that would be a successful attempt.

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Original: toutiao.com/article/7610236628606386697/

Statement: The article represents the personal views of the author.