SINGAPORE (Reuters) - Building a balanced relationship with China requires Germany and Europe to be united, innovative and competitive, said German Chancellor Friedrich Merz. 
“Wise China policy begins at home,” he said on Tuesday in a lecture in Singapore where he is on a two-day official visit, amid trade tensions between Europe and China that has threatened to escalate into an all-out trade war. 
“We will be better equipped to build balanced relations with China if we ourselves are united, strong, resilient, innovative and competitive.
“We are working systematically towards that goal, both in Germany and at the European level,” he said, as he delivered the 49th Singapore Lecture. 
Europe-China talks earlier in October resulted in China agreeing to cap hybrid electric vehicle exports to the European Union over a four-year period. Brussels is alarmed at a ballooning trade deficit that reached €360 billion (S$515 billion) in 2025 - or about €1 billion a day. 
China’s manufacturing might is causing frictions with European industries, in sectors from electric vehicles to chemicals, pharmaceuticals and industrial machinery.
Germany has advocated stronger defensive trade tools against what it views as unfair trade practices by other countries. Merz visited Beijing in February to address issues such as Germany’s growing trade deficit and Chinese industrial overcapacity.
Speaking at the Singapore Marriott Tang Plaza Hotel in Orchard Road, Merz said that it is imperative to continue dialogue with great powers, “even where our interests and values only align in part”. 
Decoupling “would be a big mistake”, he said, as doing so would make Germany neither safe nor more prosperous. “Instead, we are pursuing de-risking and diversification.” 
How Germany intends to manage its growing strains with China was a key theme of Merz’s lecture, alongside the existential nature of the Russia-Ukraine war for Europe, and advancing cooperation in research, technology and people-to-people exchanges. 
His 20-minute speech was titled Germany and the Indo-Pacific: Partnership, Competitiveness and Resilience in a Changing World.