German President Frank-Walter Steinmeier is seeking to prevent further escalation in tensions during his latest official visit to China.

China remains exceptionally important for key sectors of the German economy. The Asian giant is the second most critical foreign location for German companies.

As reported by German Foreign Policy, investments by these companies in China total over 110 billion euros. By comparison, German investment volumes are higher only in the US and Luxembourg, with investments in Luxembourg largely driven by tax advantages.

German companies also continue to invest in China. In the first half of 2026, they carried out investments of around 5.6 billion euros, surpassing even the 4.3 billion euros invested in the US.

In addition, automotive groups, among others, are increasingly conducting research and development activities in the People’s Republic of China.

According to a recent assessment by an expert from the Cologne Institute for Economic Research (IW), some companies are using this fast-developing country as a “fitness centre”.

At the same time, however, China’s importance as a sales market is declining sharply: German exports to China fell from 107 billion euros in 2022 to just 81 billion euros in 2025.

Above all, China’s exports to Europe and particularly to Germany are surging, threatening to erode the market share of the flagship sectors of German industry on their domestic market, especially automotive, mechanical engineering, and the chemical industry.

EU prepares moves against China

The EU is responding with defensive measures, but this remains a sensitive issue.

Should China retaliate, it could cause severe damage, particularly to German industry, given its substantial presence in the country.

In October 2024, Brussels imposed high tariffs on electric car imports. As Chinese manufacturers subsequently began exporting hybrid models to Europe on a large scale, debate quickly emerged over introducing high tariffs on these vehicles as well.

Meanwhile, measures targeting machinery and chemical imports are also being prepared, as European Commission President Ursula von der Leyen announced at the latest EU summit held in Brussels in mid-October.

The EU is additionally working on a package known as the “second-strike instrument”. German Chancellor Friedrich Merz and French President Emmanuel Macron recently called for the deployment of this mechanism in a joint letter to the Commission.

The objective of this tool is to enable robust measures in situations of intense economic power struggles, including the partial or even total exclusion of third-country companies from the EU single market within just a few days.

Under the proposal, the European Commission would be able to decide on such measures on its own initiative. In that scenario, member states insisting on the adoption of the measures would reportedly be less easily identifiable, allowing them to hope to avoid Chinese retaliation.

Hybrid vehicle compromise

According to German Foreign Policy, doubts about whether the EU could survive an open economic war against China rest on solid ground.

In mid-June, the Financial Times reported that experts from think tanks and academia had simulated escalating economic clashes between the two sides in a tabletop exercise.

In that simulation, Brussels failed to bring Beijing to its knees; on the contrary, it would probably have lost an open economic war.

Against this backdrop, the EU agreed to settle the dispute over Chinese hybrid car imports through negotiations.

A few days before the mid-October EU summit, EU Trade Commissioner Maroš Šefčovič managed to outline such a resolution during talks in Beijing with Commerce Minister Wang Wentao.

Under the agreement, the volume of hybrid cars exported from China to the EU, which stood at around 302,000 units in 2025, will be capped from December at an annual 350,000 units; more precisely, 350,000 units plus 6% per year.

This arrangement is envisaged to remain in effect for four years, granting EU carmakers some breathing space to catch up with their Chinese rivals.

Similar arrangements are being discussed in mechanical engineering and the chemical industry, as well as potentially in pharmaceuticals.

China counter-moves: Export controls

While the EU pursues this track and prepares its economic “second-strike instrument”, the People’s Republic of China is taking steps to secure leverage in current economic power struggles.

These measures are directed primarily at a potential escalation of the economic war with the US, which is currently more or less frozen, but in a worst-case scenario they could also be deployed against the EU.

Specifically, Beijing is preparing new export controls that go beyond the restrictions on rare earth elements with which China succeeded in blunting an unprecedented US tariff and sanctions offensive.

As reported early last week, the People’s Republic of China plans to subject exports of roughly 40 technologies, spanning artificial intelligence (AI), biotechnology, and photovoltaics, to strict licensing conditions, or even prohibit them outright.

The stated rationale is that the country merely wishes to take steps to “safeguard national security”, in an overt mirror of the primary justification invoked by the US for a wide array of embargo measures.

With critical technologies subject to restricted export or barred entirely, relocating the production of certain goods such as photovoltaic cells away from China to foreign locations will become harder, a shift that could also affect European firms.

Steinmeier visits China: Can he defuse tensions?

Against this background, German President Frank-Walter Steinmeier arrived in China on Monday for his latest official visit.

On the first day of his trip, Steinmeier visited the Volkswagen Group facility in the metropolis of Hefei.

Volkswagen operates a research centre there employing around 3,000 engineers, designed to keep pace with the rapid development of electric mobility in the People’s Republic of China.

Innovations developed in Hefei are transferred at times to facilities in Germany, helping prevent them from falling further behind internationally.

Hefei has transformed into a high-tech hub on the back of heavy investment in emerging sectors such as artificial intelligence, semiconductors, and new energy vehicles.

VW plans to supply Central Asian and particularly South-East Asian markets from its Chinese facilities to preserve competitiveness across these regions.

Marking the Federal President’s trip, the Office of the Federal President stated that the goal was not “decoupling from China”, but rather sustaining “close and resilient economic relations”.

According to reports, Steinmeier coordinated not only with Federal Chancellor Friedrich Merz, who is currently visiting Japan, but also with EU Trade Commissioner Maroš Šefčovič, who is pursuing robust trade policy alignment with the People’s Republic of China in line with German industrial interests.

Steinmeier is eager to support this effort and is accompanied notably by Peter Leibinger, president of the Federation of German Industries (BDI).

The president will then travel to Beijing to hold talks with top leaders, including his Chinese counterpart Xi Jinping and Premier Li Qiang, before concluding his visit.

His office noted that the visit seeks to “address Germany’s multifaceted and complex relations with China and the challenges confronting them”, while his time in Anhui will highlight “China at the turn of the century around 1900 and the significance of this era in the history of German-Chinese relations”.

According to the South China Morning Post, the selection of Anhui underscores Berlin’s emphasis on dialogue despite deteriorating bilateral ties amid rising trade tensions, driven by German concerns that fierce Chinese competition could erode Germany’s manufacturing core.

German leader’s packed China itinerary

Before heading to Beijing, Steinmeier will also visit the historic village of Hongcun and Mount Huangshan, sites that the German presidency noted bring together “nature, architecture, and philosophy”.

In the capital, Steinmeier will tour the Institute of Atmospheric Physics under the Chinese Academy of Sciences to evaluate climate cooperation, followed by an address at Peking University. Xi is subsequently expected to receive him with full military honours.

Visiting leaders’ regional engagements extend well beyond Anhui, with China’s financial capital, Shanghai, remaining one of the most sought-after stops.

In January alone, the city hosted South Korean President Lee Jae Myung and British Prime Minister Keir Starmer, while a visit in August by King Abdullah II of Jordan further cemented Shanghai’s standing as a gateway to Chinese technology and consumer markets.

Just south of Shanghai, Hangzhou has emerged as a similarly vital diplomatic destination. Once renowned primarily for the classical scenery of West Lake, the capital of Zhejiang province has evolved into an innovation hub drawing foreign heads of state with itineraries centred on robotics, e-commerce, and advanced manufacturing.

The Ukrainian government is preparing a new mobilization model that fundamentally alters military deferrals, requiring businesses to systematically supply personnel to the armed forces in exchange for shielding other employees from service.

Prime Minister Serhiy Koretskiy announced that under the draft framework, which is scheduled for completion by 1 December, enterprises will pledge to send a designated quota of staff into the ranks of the Armed Forces of Ukraine to secure exemptions for remaining workers.

Speaking at the Kyiv International Economic Forum, as reported by the Interfax-Ukraine news agency, Prime Minister Koretskiy said the objective is to end the practice of drafting men off the streets.

Describing the projected structure as an idealistic social contract, Koretskiy said: “Let us establish a social model where employees are safeguarded, but businesses also commit to providing a predictable flow of mobilization for the military. If we can devise such a formula, the necessity of searching for people on the streets will also be eliminated.”

Koretskiy noted that deferrals will be renewed for over 90% to 95% of staff in critical sectors such as fuel, energy, and the defence industry. He emphasized that the criteria defining an enterprise as critical will be decoupled from economic exemption standards.

The prime minister stated that this regulatory change will curb unjustified deferrals, prevent an economic collapse, and bring certainty to the rotation expectations of soldiers serving on the front lines.

In separate remarks delivered the previous week, Koretskiy noted that the government intends to preserve exemption rights for companies that sustain national defence capacity and vital everyday services, while simultaneously increasing criminal penalties for unauthorized absence from military units and draft evasion.

Immediately following these statements, the official resolution overhauling the mobilization deferral system was published on the Ukrainian government website.

According to details reported by the UNIAN news agency, state institutions and regional administrations will review existing criteria and audit every business previously granted “critical” status within 10 days of the regulation entering into force.

Enterprises that no longer satisfy exemption conditions or whose justifications have lapsed may have the status rescinded prematurely.

A new coordination centre is being established to administer the process. This body will issue advisory decisions regarding the granting or revoking of critical enterprise status, as well as requests to raise exemption quotas.

The bureaucratic procedure limits the initial review to a maximum of 7 working days, after which the coordination centre will have up to one month to assess the file. A final decision must then be rendered within 3 working days of the recommendation reaching the commission.

For select enterprises operating in the energy and defence sectors, the ceiling for staff exemptions has been capped at 95%. However, this entitlement will apply strictly to personnel directly engaged in production processes.

Authority to raise the exemption quota above the 95% threshold will depend entirely on special approval issued by either the Ukrainian Defence Ministry or the Energy Ministry.

The compliance history of company leadership will directly influence the procedure; quota increase requests may be rejected outright if executives have violated military registration requirements two or more times in the preceding 12 months, or if they have received administrative fines on those grounds.

Companies granted quota increases will have 10 working days to conclude the required formalities.

If an enterprise fails to formalize worker deferrals through Diia, Ukraine’s digital public services portal, within this timeframe, the supplemental quota allocation will be revoked entirely. All approved exemption quotas will remain valid for a maximum duration of one year.

Martial law and general mobilization, which were declared in Ukraine on 24 February 2022, have been extended at regular intervals ever since.

On 26 October, the Ukrainian parliament renewed these measures for the 21st time, approving a 90-day extension that runs until 29 January 2027.

Under current legislation, men aged between 25 and 60 who are deemed fit for military service are directly subject to mobilization.

Men under the age of 25 are classified under conscription call-up status and are not dispatched to the front line through general mobilization.

Individuals in this age bracket retain the right to travel abroad between the ages of 18 and 22 via an age-based exception, but they lose this entitlement upon turning 23.

Front-line manpower deficits have long prompted authorities in Kyiv to pursue reforms to the military recruitment framework and to tighten deferral requirements.

The Defence Ministry announced in February that extensive measures were planned, including the automation of deferral procedures and adjustments to the operations of Territorial Recruitment and Social Support Centres (TZK), which function as enlistment offices.

In April, Member of Parliament Roman Kostenko stated that the ministry planned to separate the recruitment duties of draft centres from their social assistance responsibilities, while the possibility of transferring certain mobilization enforcement checks to the police was also raised.

By August, Kostenko reported that the Defence Ministry was examining radical measures, including potential alterations to the mobilization age.

Shortly before that, Minister of Digital Transformation Oksana Ferchuk announced that oversight over exemptions, particularly in the information technology sector, would be significantly restricted.

Meanwhile, the Ukrainian military’s requirement for front-line reinforcements grows on a daily basis.

In an assessment delivered on 31 August, Head of the Office of the President of Ukraine Kyrylo Budanov stressed that the military must enlist at least 30,000 individuals each month to sustain its combat effectiveness.

As forced mobilization for the front lines accelerates, objections to heavy-handed practices by recruitment centre personnel have multiplied.

Official complaints concerning draft office personnel stood at just 18 in 2022, before surging to 514 in 2023 and 3,312 in 2024. The influx of grievances continued unabated, peaking at 6,127 official complaints according to 2025 figures.

Draft proposals by the US administration to end the war in Ukraine envisage establishing a demilitarised line in the Donbass region, easing sanctions against Moscow, and offering a comprehensive investment package to Kyiv.

According to a report by the British magazine The Economist, citing Ukrainian officials, Washington is working on a broad framework comprising both economic and political points to persuade the parties to reach a settlement.

Under the draft plan reported by the publication, Russia is offered the opportunity to conclude trade agreements with the US, an easing of sanctions, and the normalisation of political relations.

Ukraine, in exchange for relinquishing its goal of NATO membership, is promised direct foreign investment and European Union accession.

The report notes that Ukrainian officials do not possess complete visibility over every detail of the final text on the table, but are closely familiar with its overarching framework.

Nord Stream pipeline and natural gas shipments on the table

The Economist reported that the package designed to persuade the leadership in Moscow also includes items such as the resumption of Russian natural gas sales to the European market and the reactivation of the Nord Stream pipeline.

The magazine also points out that decisions regarding the operation of a pipeline located on European territory do not fall directly under US jurisdiction.

Ukrainian negotiators, meanwhile, are concerned that the Washington delegation may lock in commercial agreements in line with its own economic interests before the fighting formally stops.

Speaking to the magazine, a Ukrainian official summed up the American side’s approach with the words: ‘Why wait and waste time? Time is money.’

Diplomatic contacts intensify at leadership level

Stating that it is ready for talks, the Russian government announced that an agreement had been reached in recent contacts with Washington to launch a trilateral negotiation process that would also include Ukraine.

Russian President Vladimir Putin said: ‘The objective of these negotiations will be to address the issue of ensuring the security of Ukraine and Russia once peace agreements are reached.’

As part of these diplomatic efforts, US President Donald Trump’s special envoy, Steve Witkoff, met Russian leader Putin on 21 October at the Konstantinovsky Palace in St. Petersburg.

Speaking during the portion of the meeting open to the media, Witkoff noted that he had brought documents outlining a pathway to peace and asked Putin to examine these texts.

Kremlin spokesperson Dmitry Peskov announced that the president would evaluate the American proposals.

Noting that concrete ground for a ceasefire had emerged during the St. Petersburg meeting, Witkoff expressed hope for the start of trilateral contacts between Russia, the US, and Ukraine to address technical matters.

Putin thanked Trump for his interest in peace efforts and recounted that the US president had specifically emphasized during their recent telephone calls that the war must end as soon as possible.

Framework prepared in Oslo carried to Moscow

Immediately before his visit to St. Petersburg, Witkoff had attended talks held on 20 October in Oslo, the capital of Norway.

Trump’s son-in-law Jared Kushner joined the meeting remotely due to illness, which was attended by Ukrainian President Volodymyr Zelenskyy, Finnish President Alexander Stubb, and Norwegian Prime Minister Jonas Gahr Store.

According to information provided by Stubb, the parties at the Oslo meeting clarified key security and economic elements that the American envoy would present to Moscow. Air defence systems, energy infrastructure, and partial ceasefire measures were also discussed.

Commenting after the talks in St. Petersburg, Russian presidential aide Yury Ushakov argued that the newly presented approaches did not contain many elements useful for a resolution.

Noting that Witkoff informed Putin about the contacts in Oslo and relayed fresh nuances in the positions of European leaders and the Kyiv government, Ushakov stated that the meeting was thorough and frank, adding that the conflict is ‘moving toward an end.’