Soaring trade discrepancy with China pointed out by economists as a concern - escalating trade deficits with China warned by economic analysts
In the heart of Europe, Germany, known for its robust automotive and metal industries, is experiencing a significant shift in its trade relations with China. According to IW trade expert, Jürgen Matthes, the need for political defence from the European Union (EU) to create equal conditions is increasingly crucial.
Recent data reveals that as of mid-2025, Germany maintains a substantial trade surplus overall, but its exports to China have taken a sharp decline, particularly in key sectors such as motor vehicles and metal products. In May 2025, Germany recorded a trade surplus with the world of approximately 18.4 billion euros, with robust export levels overall (129.4 billion euros exports vs. 111.1 billion euros imports). However, exports from Germany to China fell by 14.2% in the first five months of 2025 compared to the previous year.
This drop in exports impacts industries like motor vehicles, where Germany traditionally holds a strong export position, suggesting increased trade imbalances at the sectoral level despite the overall surplus. Simultaneously, German imports of Chinese electric vehicles contrast with the general trend, decreasing, while imports of metal products from China have risen by 25 percent.
To address China's unfair trade practices, the EU employs a combination of regulatory and diplomatic tools. These include implementing trade defense instruments like anti-dumping and anti-subsidy measures to counteract unfairly priced imports and subsidies that distort the market. The EU also pursues dialogue and negotiations with China to address concerns on market access, intellectual property protection, and transparency.
Enforcement of regulations under the EU’s trade policy framework aims to level the playing field for European businesses, while increased monitoring and enforcement actions ensure compliance with agreed trade rules. However, the EU-China summit in Peking is overshadowed by contentious issues, with the electric vehicle tariffs being one of them.
Jürgen Matthes, the IW trade expert, accuses China of playing unfairly in trade, citing the artificially low yuan value against the euro and the heavy subsidies provided by the Chinese government to its companies. He views the tariffs on Chinese electric vehicles as a positive example, as they have decreased imports by 38 percent.
As Germany navigates this challenging trade landscape with China, the EU remains committed to mitigating the impact of perceived unfair practices on trade imbalances, especially in sensitive sectors like automotive manufacturing. However, recent data does not provide detailed breakdowns solely for motor vehicles trade values or the precise impact of specific EU trade measures with China in 2025, so some conclusions are based on the broader trends observed.
- The EU is employing a combination of regulatory and diplomatic tools, including trade defense instruments, to address China's unfair trade practices in sectors like automotive manufacturing, where Germany maintains a strong export position.
- In the midst of this, German imports of Chinese electric vehicles are decreasing, while imports of metal products from China have risen significantly, indicating a change in the balance of trade between the two countries.
- Politics plays a role in this situation as the EU seeks equal conditions for its member states, with Germany experiencing a sharp decline in exports to China, particularly in key sectors like motor vehicles and metal products.
