Submitted by Thomas Kolbe

Germany’s dramatic economic collapse is dragging its geopolitical standing down with it. Foreign Minister Johann Wadephul has now learned what it means to be treated as a second-tier diplomat, receiving the red card from Beijing. A humiliation and a reprimand for Germany.

The school of life can be cruel. Growing up usually means losing lofty ideals, fringe ideologies and the dreamy mindset of an inexperienced existence to the harsh reality of the world. Reality follows its own rules, unimpressed by self-delusion.

That moment of maturity, the exit from the bubble of hermetically sealed party ideology, has now arrived for Germany’s top diplomat.

A Minister of Fantasies

Johann Wadephul, who only recently wandered through wonderland attributing the German economic miracle to Turkish immigrants, had to cancel his first official visit to China at the last minute because Beijing saw no need to speak with a German delegation.

The Christian Democrat is learning, much like his BlackRock-seasoned party colleague Friedrich Merz, that Germany’s dramatic economic decline is being followed instantly by a loss of geopolitical relevance.

Wadephul’s first China trip was intended as a reset in the strained diplomatic relationship with Beijing. A high-profile business delegation was set to accompany him and help ease tensions over critical rare earth supplies.

China has been threatening a complete export ban for weeks, a measure that would instantly paralyze key German industries.

Suddenly Business Matters

The delegation was to include representatives from the German automotive industry, Siemens Healthineers, the German Robotics Association and a leading importer of rare earth elements. Together, they were meant to relieve pressure in Beijing and secure access to the essential resources that Germany’s industrial base cannot function without.

When Beijing made clear that it would not entertain additional talks beyond the mandatory meeting of foreign ministers, Wadephul was forced to cancel the trip late Friday. A last-ditch attempt to save face and limit the political damage.

Perhaps Wadephul should have copied his predecessor Annalena Baerbock and focused on moral-philosophical escapism such as feminist foreign policy. It is harmless, fits the German zeitgeist and would have earned him brownie points among left-leaning coalition partners.

The Giant’s Achilles Heel

Right now Europe would desperately need a delegation that positions itself smartly in the slipstream of the Americans.

Every giant has a weakness. China’s economy is caught in a self-reinforcing deflationary spiral triggered by draconian US tariffs and a long-festering property crisis caused by massive state-driven capital misallocation.

Deflation is fatal because China’s growth relies on the fiat-credit machine. Rising insolvencies mean shrinking loan books. The credit turbo sputters, collateral values collapse through fire sales and oversupply, especially in real estate. Then the state must intervene again, inject more government credit and weaken its currency further.

It is a vicious cycle gripping nearly every modern economy.

China’s answer has always been the same: a colossal export-subsidy engine, a mercantilist model built at the expense of trade partners who lost production capacity to China.

Beijing’s trade surplus accounts for roughly 1 percent of global GDP. Roughly 1 trillion US dollars, fueled by massive export aid.

On top of that come geopolitical Trojan horses like the Belt and Road Initiative, opening markets wherever China needs raw materials.

China Is Desperate for Replacement Markets

Europe’s internal market has become essential for Beijing to dump excess production. The US market is increasingly blocked since Donald Trump’s tariff offensive: Chinese exports to the United States have crashed by a staggering 27 percent.

At the same time, Chinese exports to Germany rose 10.7 percent in the first half of the year.

To prevent a labor-market meltdown at home, Beijing is flooding alternative markets with overcapacity. The Communist Party is facing a youth unemployment rate likely around 20 percent. The social explosive lies right there.

This is precisely where Europe — especially Berlin — could apply leverage. In the escalating struggle for rare earth access, crucial for German industry and especially automakers, Europe could build real bargaining power by teaming up with the United States.

Irresponsible and Stubborn

It is irresponsible, considering China’s 90 percent dominance in rare-earth refining, not to side with Washington and secure strategic advantages for Europe’s own industrial survival.

Ideologically rigid, strategically naive and severely weakened by its trade debacles with the US, EU Commission President Ursula von der Leyen is stumbling from one pseudo-summit to the next like a dethroned Brussels queen.

One gets the impression that the entire climate circus, the theatrical solidarity on Ukraine and the delusional green posture have become a psychological overcompensation for the visible failure of the Brussels project.

Time to Seek Alliance with the United States

Europe should have embraced geopolitical division of labor with Washington from the start. Especially now that the US, under a hyperactive foreign-policy president, is openly claiming leadership. Trump is right to point at EU protectionism, ubiquitous climate regulation and a policy increasingly hostile to markets.

Washington is on the offensive: deregulation, tax cuts, junking the quasi-religious climate cult. It’s working: the US economy is growing 3.8 percent, new debt fell from 6.7 to 5.8 percent. Trump is recalibrating the system while Europe tumbles in the opposite direction: higher debt, deeper recession.

Wadephul and his fellow European diplomats must finally accept this reality and drop their escalating crusade over censorship laws, scrap the Digital Services Act, the Digital Markets Act and the online-surveillance regime entirely. Instead, they should seek fair trade with the US without hidden climate protectionism.

Europe is resource-poor and energy-dependent, importing up to 60 percent of its energy. Without Russian energy and raw materials, Europe’s prosperity model collapses.

And the attack on a Eurasian rapprochement between continental Europe and resource-rich Russia did not come from Washington, despite media mantras to the contrary. It came straight from the heart of the European Union.

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About the author: Thomas Kolbe, born in 1978 in Neuss/ Germany, is a graduate economist. For over 25 years, he has worked as a journalist and media producer for clients from various industries and business associations. As a publicist, he focuses on economic processes and observes geopolitical events from the perspective of the capital markets. His publications follow a philosophy that focuses on the individual and their right to self-determination.