German Chancellor Friedrich Merz proposes EU-Asia trade alliance to counter China pressure

Oct 27, 2026

German Chancellor Friedrich Merz proposes a strategic alliance between the European Union and Asian middle powers, including CPTPP members, to counter trade restrictions and economic pressure from China. Speaking in Singapore on October 27, 2026, Merz rejects full economic decoupling from Beijing, advocating instead for de-risking and diversification amid a European trade deficit with China that reached €360 billion in 2025.

Merz proposes EU-CPTPP trade alliance

▪German Chancellor Friedrich Merz proposed an interregional trade alliance between the European Union and the 12-member Comprehensive and Progressive Agreement for Trans-Pacific Partnership on October 27, 2026 in Singapore.
▪Friedrich Merz stated that the European Union and members of the Trans-Pacific Partnership trade pact together account for more than one-third of total global trade.

Merz urges broader EU-Asia ties

▪German Chancellor Friedrich Merz stated that the European Union is willing to join an ASEAN initiative to integrate regional power grids and enhance defense cooperation.
▪German Chancellor Friedrich Merz urged the European Union to better coordinate its bilateral trade frameworks with Asian partners including Singapore, Malaysia, Indonesia, and India.
▪German Chancellor Friedrich Merz called on October 27, 2026 in Singapore for European and Asian middle powers to build a strategic alliance spanning trade, technology, and security.

Efforts toward EU-ASEAN trade deal

▪Singapore Prime Minister Lawrence Wong stated that Singapore will push to advance an ASEAN-EU free trade agreement when it assumes the ASEAN chairmanship in 2027.
▪The Philippines and the European Union reached an initial free trade agreement in September 2026 that could pave the way for a broader ASEAN-EU deal.

Merz outlines position on China relations

▪German Chancellor Friedrich Merz stated in Singapore on October 27, 2026 that full economic decoupling from China would be a mistake, advocating instead for de-risking and supply chain diversification.
▪German Chancellor Friedrich Merz characterized Germany's policy towards China as coming of age and aligned with the broader European Union stance.
▪German Chancellor Friedrich Merz affirmed Germany's continued adherence to its One-China policy regarding Taiwan while warning that any escalation in the Indo-Pacific would harm global security.

EU and German trade deficits with China

▪European Union trade data showed that the goods trade deficit with China reached €360 billion in 2025, averaging approximately €1 billion per day.
▪Federal Statistical Office figures showed that Germany's trade deficit with China reached nearly €90 billion in 2025, with German imports totaling €170.6 billion against exports of €81.3 billion.
▪European Union Trade Commissioner Maros Sefcovic reported that the European Union's trade deficit with China reached almost €197 billion during the first half of 2026.

EU measures to curb Chinese imports

▪European Union negotiations with China resulted in an agreement for China to cap its exports of hybrid electric vehicles to the European Union over a four-year period.
▪European Union ministers called in October 2026 for agreements with Beijing to curb imports across sectors including chemicals and industrial machinery.

Steinmeier addresses China economic strategy

▪German President Frank-Walter Steinmeier urged German business leaders during an October 27, 2026 visit to Volkswagen's facility in Hefei, China, to act with confidence in the Chinese market.
▪German President Frank-Walter Steinmeier called on October 27, 2026 for Europe to reorganize its economic instruments in response to its growing trade deficit with China.

Mercedes-Benz cuts profit outlook

▪German automobile manufacturer Mercedes-Benz reduced its 2026 profit margin forecast following a 29% decline in vehicle deliveries in China during the first nine months of 2026.
▪Mercedes-Benz shares fell 3.4% on October 27, 2026 after the company announced a reduced profit margin forecast for 2026.