Brussels can set all the deadlines it wants, but Beijing has already figured out that Germany, not the European Commission, holds the pen on Europe’s China policy.
A deliberate sequence
When Trade Commissioner Maroš Šefčovič and Commerce Minister Wang Wentao stood together on June 29 to launch the new EU-China Trade and Investment Consultation Mechanism, the framing was carefully bloc-wide: four pillars covering trade balance, export controls, intellectual property, and WTO reform, plus a joint monitoring system to track flows and build trust. Šefčovič told reporters the goal was “tangible results” by October, with a Commission visit to Beijing planned for the autumn.
But the meeting that will matter more happened a day earlier, with far less fanfare. On June 28, Wang sat down in Brussels with Germany’s economy minister, Katherina Reiche, and the two sides agreed to revive the China-Germany Joint Economic Committee, establishing working groups on trade and investment and on industrial cooperation. Wang used the meeting to ask Germany to “play an active role” inside the EU in pushing Brussels toward what Beijing calls a more “rational and pragmatic” position. That sequencing was not incidental. Beijing understands that the EU does not really negotiate with China as a unified bloc. Rather, it negotiates as twenty-seven member states with sharply different exposure, and one of them holds a substantial influence over how far collective action can go.
The chokepoint
The numbers explain why Germany occupies that position. China remained Germany’s largest trading partner in 2025, with bilateral trade of roughly €250 billion, and some 5,200 German firms operate inside China, concentrated in automotive, machinery, and electrical equipment. These are precisely the sectors EU trade defenders say are most exposed to Chinese overcapacity. That overlap is the paradox running through German China policy: the same industries pressing Berlin hardest about unfair competition are often the ones with the deepest financial stake in Chinese supply chains and market access.
It is why Germany declined to sign a late-May non-paper from France, Spain, Italy, the Netherlands, and Lithuania urging Brussels to crack down harder on Chinese overcapacity, even as Chancellor Friedrich Merz called in March for an EU trade agreement with Beijing. Reiche made her own inaugural visit to Beijing in late May, leading a business delegation of roughly 40 companies to discuss energy technology and digital cooperation, and telling a Guangzhou roundtable that Germany hoped to attract more Chinese investment. Weeks later in Beijing, Premier Li Qiang and Merz jointly addressed a symposium of the China-Germany Economic Advisory Committee, with Merz describing the two economies as “pivotal” partners and pledging deeper cooperation across autos, chemicals, and renewables. None of this looks like a government preparing to endorse new safeguard tariffs.
Two tracks, one government
What makes this moment unusual is that Germany is now running two China policies at once, and they are not obviously aligned. The bilateral track is warm: revived joint committees, promised technical talks on export controls, and explicit Chinese requests for Berlin’s help managing Brussels. The European track is where German ministers sit alongside colleagues pushing a Section 301-style instrument and a mandate forcing companies in critical sectors to diversify suppliers — a policy the Commission has been developing since rare-earth export curbs disrupted European manufacturers in 2025, before Beijing signaled in late June it would not let existing controls affect EU supply chains.
Cultivating the bilateral relationship to shape the multilateral one is a familiar Chinese strategy, and it worked before: German diplomacy pushed hard to conclude the EU-China Comprehensive Agreement on Investment in 2020, only to watch ratification collapse the following year over Xinjiang-linked sanctions. The open question is whether that approach still works now that the underlying economics have moved so far against German industry. A trade deficit that keeps widening changes what domestic manufacturers are willing to tolerate and what a government facing its own job losses is willing to defend in Brussels.
The Commission’s own internal case for a tougher posture, presented to the full college of commissioners ahead of the June European Council, reportedly described the trade and industrial data in stark terms, drawing on outside economists to make the point that deindustrialization pressures linked to Chinese policy are no longer marginal. Commission President Ursula von der Leyen is said to back a firmer line, and the college is expected to fall in behind her. Yet the instruments under discussion — expanded safeguard measures, a supplier-diversification mandate for critical sectors — require exactly the kind of qualified-majority cooperation that a reluctant Germany can slow, dilute, or quietly narrow in scope, even without ever casting a formal veto.
The clearest test won’t be the joint EU-China statement expected around October. That document is being drafted to let both sides claim progress regardless of the outcome. The real test is the revived German-Chinese committee, whose next full ministerial session both governments are already discussing for early 2027. Will it become a channel where Berlin presses Beijing on substance? Or will it simply reaffirm cooperation while EU trade defense measures advance regardless? Watch Germany’s position on the supplier-diversification instrument, too. Berlin’s political weight makes that tool nearly unworkable without German support. And watch the price-undertaking talks on Chinese EVs. Negotiators describe them as close to a workable framework. Whether they convert into an actual settlement or quietly stall will come down to one voice: Germany’s conflicted auto industry.
For now, Beijing’s rare-earth concessions and its willingness to accept a joint monitoring mechanism suggest an authentic interest in lowering the temperature, likely because Chinese officials would rather not fight trade battles with Washington and Brussels simultaneously. But a durable reset needs more than a framework and a deadline. It needs Europe’s largest economy to decide whether its China policy will be set through Berlin’s own bilateral channel with Beijing or through the collective instruments Brussels is building. October will be the first real test of whether Germany can keep running both, or whether its own deepening trade deficit finally forces the choice.
Salman Rafi Sheikh, research analyst of international relations and Pakistan’s foreign and domestic affairs
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