What are the key developments in Germany's strategic reassessment of trade vulnerabilities with China amid growing EU-China tensions, including Berlin's mapping of leverage points, Germany's record trade deficit, the legislative committee formed to investigate trade relations, wa

• The 13-member expert commission is tasked with examining Germany's dependence on China across energy, raw material imports, and Chinese investment in critical infrastructure .
• The commission includes representatives from industry associations, labor unions, and independent experts .
• This converts what was a largely symbolic 2023 China strategy into a legislative mandate with concrete oversight powers .

Berlin's Mapping of Leverage Points and Vulnerability Assessment

A November 2025 Reuters report detailed that the German government is conducting a systematic reassessment of its trade policies specifically targeting security-relevant sectors . A major catalyst was Beijing's restrictions on rare earth exports, which demonstrated how quickly Germany's industrial supply chains could be disrupted .

A MERICS and Hinrich Foundation analysis from May 2025 identified three converging vulnerabilities: Chinese companies accelerating up the value chain and eroding German firms' competitiveness; Germany's near-total dependence on China for critical raw materials (approaching 100% for some); and the risk that German corporate investments in China could create strategic leverage for Beijing .

France's Warning on Chinese Competition Threatening European Manufacturing

On February 9, 2026, the French High Commission for Strategy and Planning (Haut-Commissariat au Plan) issued a stark report describing China's industrial expansion as a "steamroller" crushing European industry . The report warned that up to 55% of European manufacturing value added could be exposed to Chinese competition, particularly in advanced sectors like machinery, automotive, chemicals, and electronics .

The report proposed two drastic policy responses: either a blanket 30% tariff on all Chinese imports into the EU, or a 20–30% depreciation of the euro against the renminbi . It also found that Chinese manufacturers now produce goods at roughly four times the speed and one-quarter the cost of European competitors .

Italy's Machine Tool Industry Calls for EU Trade Defenses

On July 27, 2026, Italy's UCIMU machine tool manufacturers' association called on the EU to urgently strengthen trade defense measures against Chinese competition . Key points:

• Chinese metalworking machine tool exports have surged significantly, while Italy's global export share and sales to China have both slipped .
• UCIMU warned that without stronger EU action, Europe's strategic industrial position in this high-value sector would further erode .
• Earlier, on May 26, 2026, France, Italy, and Spain jointly urged the EU to toughen and accelerate trade defense reforms against low-cost Chinese imports across multiple sectors .

EU-Level Response

The EU has begun implementing concrete defensive measures. As of July 1, 2026, the EU doubled tariffs on steel imports to 50% and halved duty-free import quotas, while also imposing a €3 charge on each small parcel entering EU territory (targeting platforms like Shein and Temu) . The European Commission has been actively debating a broader policy shift to protect European industry from China's export surge .

China's Official Rejection of Overcapacity Allegations

While the specific phrasing "overcapacity allegations" was not the primary focus of the search results retrieved, China has consistently and publicly rejected EU and US claims of overcapacity, particularly in sectors like electric vehicles, steel, and green technology. In press briefings and official statements throughout 2025–2026, Beijing has argued that its industrial output is driven by market demand, innovation, and comparative advantage, not state-directed overproduction. This position has been a recurring point of contention in EU-China trade dialogues amid the escalating tensions described above.

Bottom line: Germany has moved from a symbolic China strategy to a binding legislative re-examination of its trade vulnerabilities, driven by a record €87 billion deficit, the shock of rare earth export restrictions, and warnings from France that up to 55% of European manufacturing is exposed. Italy's machine tool industry added pressure on the EU to act, and Brussels has responded with tariff hikes and parcel import charges, while Beijing continues to reject overcapacity accusations.