Jiang Feng on Germany's 2025 and beyond: no easy exit

The Chinese Germany watcher calls for structural reform in Germany and pragmatic ties with China.

The following is an op-ed by Jiang Feng, published on 29 December 2025 at Shanghai Observer 上观新闻, the digital platform of Jiefang Daily, the official newspaper of the Shanghai Municipal Committee of the Communist Party of China (CPC).

Jiang Feng is Professor and Chairman of the Council of the Shanghai Academy of Global Government and Area Studies (SAGGAS) at Shanghai International Studies University, which he previously headed. Jiang also served as Minister-Counselor at the Chinese Embassy in Berlin.

German Chancellor Friedrich Merz is set to make his first visit to China since taking office from February 24 to 27, 2026, German media outlets reported in the past few days.

大咖谈 | 姜锋：2025年，德国在多重外来压力下艰难谋求破局

Expert Insights | Jiang Feng: In 2025, Germany Struggles to Break the Deadlock Under Multiple External Pressures

Germany needs more than diplomatic finesse and technical stimuli such as “war economics”; it needs strategic foresight and the courage to pursue structural reform.

In 2025, Germany, like the rest of the European continent, is urgently seeking strategic autonomy, yet it has never faced external pressures as unprecedented as those it is confronting this year. The U.S. dual policy of withdrawing from Europe while reshaping it is shaking the foundations of the North Atlantic value alliance and eroding Europe’s strategic self-confidence.

At the start of 2025, U.S. Vice President J.D. Vance accused Europe of lacking democracy and freedom, signalling the beginning of an open split within the alliance. By the end of the year, the National Security Strategy released by the U.S. administration was dubbed by European media as America’s “divorce papers” served on Europe. The security crisis triggered by the Russia–Ukraine war remains immediate and pressing; the loss of Russia’s stable, cheap energy supplies continues to batter Europe’s economy and day-to-day living. Globally, the European decline in innovation and competitiveness is challenging Europe’s traditional economic model, as well as its sense of cultural superiority, self-esteem, and confidence. Meanwhile, high politicisation of migration, intertwined with a crisis of social identity, is further deepening political polarisation and social fragmentation in Germany and across European countries.

In May 2025, Germany’s Union parties (CDU/CSU) and the Social Democratic Party (SPD) formed a “grand coalition” government, with Friedrich Merz elected chancellor. The new administration’s governing strategy can be summed up in two keywords: European self-strengthening and economic growth. Merz pledged to deliver 2% growth in the German economy, lead Europe towards prosperity, and end the war. He required all cabinet members to be proficient in English, to project Germany’s presence across European policy arenas, and to assume a leadership role in Europe. After the Trump administration withdrew support for Ukraine, the Merz administration pushed Europe to shoulder the main burden of the war.

To that end, at the risk of deepening Russia’s hostility towards Germany, Merz joined EU leaders in a forceful push to mobilise member states to approve the use of frozen Russian assets as collateral for aid to Ukraine. Although the year-end EU leaders’ summit did not adopt Merz’s proposal to tap the more than €210 billion in frozen Russian funds, it decided instead to provide €90 billion to Ukraine on the basis of Russia’s potential future “war reparations”. Some reports argued that Merz failed to meet his original goal and suffered a major diplomatic setback; Merz, however, expressed satisfaction, saying that the EU, propelled by his efforts, had supported Ukraine in a flexible way and that he had therefore achieved his original objective.

Beyond the war, the new German administration appears to lack dynamism in its diplomacy. Chancellor Merz has yet to set out a clear plan for managing Germany’s relations with major powers such as the United States, China, and India, or for engaging with the Global South.

A representative case is the EU–Mercosur free-trade deal, which Germany actively promoted. It was stalled just as it was about to be signed, due to opposition from countries including France and Italy, alongside street protests in Brussels by thousands of farmers.

Diplomacy is not only the craft of negotiation; it is also a matter of strategy. Amid profound global shifts—Germany’s loss of strategic reliance on the U.S., as well as on Russian energy and markets, and the visible transfer of technological and manufacturing advantages between Germany and China—how should Germany position itself to secure a breakthrough and renewed development?

On these major questions, the Merz administration continues to rely on the familiar language of “de-risking”. The difference is that a strategy once aimed primarily at China is now explicitly extended to the United States as well. Analysts generally argue that “de-risking” from China has proved ineffective, and Europe’s dependence on China has, in fact, deepened. Meanwhile, “de-risking” from the United States lacks realistic conditions, because Europe does not have the corresponding strength.

Treating major global powers as “threats” and “risks” and simply attributing domestic governance and development problems to external factors should not be the European diplomatic strategy that Germany pursues.

On economic policy, the new administration has taken steps, including scrapping the “debt brake” (Schuldenbremse) and approving large-scale budget spending to push the economy back on a growth path, but the results so far have been limited. The Ifo Institute for Economic Research forecasts that Germany will again be close to zero growth in 2025, with growth of 0.8% in 2026 and 1.1% in 2027—far below Chancellor Merz’s 2% target.

Compared with its diplomatic record, the administration’s economic performance has been lacklustre. The business community and economic research circles, initially full of expectations, have begun to worry about Germany’s economic outlook.

Historically, Germany has weathered multiple industrial transitions and economic crises, and each time it had a “breakthrough” plan that left it stronger after the shock. The 2008 financial crisis hit Germany hard, but then-chancellor Angela Merkel confidently stated that the administration would mobilise domestic and international resources to respond and make Germany stronger in the aftermath. Domestically, Germany increased forward-looking investment in education and scientific research; externally, it strengthened international cooperation, with close engagement with China as a key link. China, for its part, extended a helping hand. As the then Chinese premier said, “Helping Europe is also helping China itself,” and he described the trip as a “journey of confidence.” After the crisis, Germany was the first EU country to return to growth, suggesting the administration’s measures were effective.

Germany now faces economic challenges more severe than those of 2008. Yet no breakthrough plan from the Merz administration is currently in sight, nor has there even been a serious discussion of one. What debate there is remains sporadic and largely confined to existing discursive frameworks.

One reason is that the Merz administration remains boxed in by ideological framings such as the notion of a “systemic rival”. Even policy paralysis caused by poor coordination among internal factions is rigidly reframed as a virtue of a “democratic system different from authoritarian politics,” offering a rationale for a lack of leadership.

Economists also worry that the fiscal measures and investments already introduced have become “election gifts” (Wahlgeschenke) designed to satisfy the interests of different parties and voter blocs, or that they are being swallowed by cumbersome bureaucracy, drifting far from the original purpose of stimulating economic development.

Internationally, the administration continues to pursue an expanded “de-risking” agenda, thereby narrowing its own room to leverage external forces—the very forces the German economy needs more than ever. Without trust and smooth cooperation with the world’s major economies, and especially if they are treated as “threats” and “risks,” it becomes difficult to imagine sustained, healthy growth in Germany.

In 2025, Germany is pressing ahead under unprecedented external pressure. The Merz administration’s efforts to break the deadlock have made concrete progress in European diplomacy. While the long-term impact remains uncertain, this has signalled a notable rise in Germany’s leadership within Europe. By contrast, the new administration’s ambition to revitalise the economy has failed to inspire broad confidence; indeed, entrepreneurs and economists are beginning to waver in their trust in its economic policies. German media have dubbed Merz the “Foreign Chancellor” (Außenkanzler), underscoring the expectation that he should also deliver results on domestic economic and social policy.

To sustain confidence, the administration must deliver an effective economic breakthrough and sustained growth; that will be the fundamental task for the German economy in 2026. Germany needs more than diplomatic finesse and technical stimuli such as “war economics”; it needs strategic foresight and the courage to pursue structural reform. It shouldn’t be searching for adversaries and risks; rather, in a world full of uncertainty, it should shed the ideological burden that has accumulated in German diplomacy over the years. It must maintain stable relations with major economic powers, especially by recognising the strategic risks created by a policy of “de-risking” from China. Germany needs to leverage external resources to address its own challenges and significantly enhance its innovation capacity and global competitiveness. This is the foundation for Germany to exercise leadership and shaping power in Europe and the world.

In the new year, Chancellor Merz plans his first visit to China since taking office. Hopefully, this will be another “journey of trust” and “journey of confidence” between China and Germany, similar to that of 2008, which will bring the relationship to a new stage of balance, trust, and mutual benefit. Such a visit could help unlock a breakthrough in Germany’s economic revitalisation and support global governance and development through high-quality bilateral relations.