Germany has changed its mind about China, and it has put it in writing.
On Monday, Chancellor Friedrich Merz and French President Emmanuel Macron sent a joint letter and paper to European Commission President Ursula von der Leyen. They want the Commission to hold a "credible instrument" allowing a "decisive and systemic reaction" to unfair trade, including "powerful measures up to an immediate cut-off from the internal market if needed". The letter names no country. It does not need to.
The Commission puts the EU's trade deficit with China at about €1 billion a day. Chinese imports into the bloc have risen 45% in five years while European exports to China have fallen. Trade Commissioner Maroš Šefčovič has called that gap "unsustainable" and a threat to Europe's social model.
Germany was the main brake on tougher action. Its carmakers and machine builders sold heavily into China, and Berlin refused two years ago to back anti-subsidy duties on Chinese electric vehicles. Other capitals have wanted harder measures for years. "Germany is pragmatic," one EU diplomat said. "As long as China was buying its cars and machinery it didn't want to pick a fight."
The letter now describes "a massive industrial shock" hitting pharmaceuticals, aerospace, cars, machine tools and chemicals. German exports to China are falling while Chinese imports surge. The domestic numbers are no better: German factory orders dropped 10.6% in August, far worse than the 1% fall economists expected.
Officially, Berlin still says it wants to stay within WTO rules and prefers to talk about "unfair practices" and "distorted competition" rather than blame Beijing by name.
Šefčovič leaves for Beijing on Thursday with a tougher mandate from member states. His main ask is that China curbs its own exports, which is a lot to demand of Beijing. He briefs EU ambassadors on his return next weekend, and leaders take up China at the European Council on 15-16 October. National ambassadors began debating the issue behind closed doors in Brussels on Tuesday.
If talks fail, the options on the table range from a new trade tool to measures on chemicals and tariffs on China-made plug-in hybrid cars. The EU taxed Chinese electric cars in 2024, but plug-in hybrids sit outside those duties and their sales have soared. The UK is reportedly preparing its own tariffs on Chinese electric vehicles.
A Franco-German consensus does not make a European one. Spain and Hungary are pushing for closer ties with Beijing. Spain's position may shift: Prime Minister Pedro Sánchez, one of the EU's most China-friendly voices, has called an election for 29 November, and a win for the centre-right People's Party could change Madrid's line.
The timing is awkward for Brussels in another way. France and Germany are asking for tougher powers while their own economies wobble, with French borrowing costs under pressure and the euro at a 17-month low against the dollar. Washington, by contrast, has stabilised its own relationship with Beijing after a Trump-Xi summit last month.
The most important sentence in the letter is not the threat. It is the fact that Berlin signed it. For years, any EU move on China ran into a German veto in practice. Without it, the Commission can go to the October summit with the two biggest economies behind a harder mandate, and Šefčovič arrives in Beijing with real leverage rather than a bluff.
The risk is that the cut-off tool becomes a threat the EU cannot use. Closing the market to a country that supplies pharmaceutical ingredients, batteries and machinery would hurt European firms and consumers too. The next two weeks will show whether leaders want a deterrent or a weapon, and whether Spain, Hungary and others will let the bloc speak with one voice.
