Merkel looks east as ties fray between Germany and U.S.

Berlin’s priorities vis-à-vis China have also had a profound impact on the EU’s own approach.

“The ties to China are important,” Merkel stressed, adding “they are of strategic importance.”

In fact, it’s difficult to overstate the importance of China as an export market for German goods, especially cars and machinery. Since Merkel took over as chancellor in 2005, German exports to China have risen fivefold to just under €100 billion last year. While some economists argue that Chinese demand for German capital goods is waning as its economy matures, the country remains a pillar of Berlin’s economic strategy and a key driver of growth.

When demand from the U.S. collapsed in the wake of the financial crisis in 2008 and 2009, Germany relied on China, which was largely unscathed by the turmoil, to fuel its own rebound — an expansion that continued virtually uninterrupted until the pandemic hit…

Merkel’s reluctance to call out China on the crackdown in Hong Kong may seem at odds with the popular image of her as a leader guided first and foremost by her moral compass, a reputation she earned with her decision to accept more than a million refugees fleeing Syria and other countries after the 2015 crisis.

In fact, the chancellor’s present course is consistent with how she has handled China over the past 15 years: expressions of concern over human rights and pledges to continue “dialogue,” coupled with a deepening of the commercial relationship.

Whether the issue was oppression in Tibet, the detention of Uighurs or the Chinese leadership’s pervasive surveillance of its own citizenry, Merkel has always put business first.

And business is good. That’s especially true for Germany’s biggest companies (and employers), from Volkswagen and Mercedes to engineering giant Siemens.