Germany is the only stop among the EU's 27 member states for the new Chinese premier during his maiden foreign tour, in a sign that Beijing wants to continue their special relationship, analysts say.
Germany is by far China's biggest European trading partner, while German motor vehicles and auto parts, machinery and electrical goods find a vast export market in the world's second-largest economy.
Li's two-day programme begins with a visit to the town of Potsdam, near Berlin, and the Cecilienhof palace where Soviet, US and British leaders met in 1945 to help shape post-war Europe and Asia.
Merkel, who on a trip to Beijing in August visited the Forbidden City accompanied by Li's predecessor Wen Jiabao, later hosts Li for talks at the chancellery after a military honours greeting.