German industry and the country’s ruling conservative and Social Democrat parliamentary groups are pressing Chancellor Friedrich Merz to support a tougher European response to Chinese competition, including faster anti-dumping and anti-subsidy measures and targeted assistance for automakers. Parliamentary sources said proposals announced on Aug. 28 were aimed primarily at Chinese overcapacity, although the document reviewed by Reuters did not name China. The groups also called for EU-law-compliant local-content criteria in Germany’s electric-vehicle subsidy program, permission for plug-in hybrids, range-extender electric vehicles and highly efficient combustion-engine cars after 2035, and suspension of a planned early-2027 tightening of the utility factor used to calculate plug-in-hybrid emissions. Merz has asked his cabinet to prepare proposals on EU-China trade imbalances and indicated support for Brussels to develop measures if October talks with Beijing fail. The policy shift reflects mounting pressure on German companies in China, Europe and third markets: Germany’s trade deficit with China widened by around €22 billion last year to €89.3 billion, while an OECD report found Chinese manufacturers received three to eight times more state support than OECD rivals relative to revenue. Merz has also said Germany could achieve at least 1% growth in 2027 through business reforms and higher government spending, though the coalition’s ability to implement its agenda remains under scrutiny.