"Especially in times of crisis I want the European Union to show solidarity on a global level too and take on more responsibility," she told the Konrad Adenauer Stiftung think tank by video link.
"In many places, the pandemic will intensify existing conflicts and problems and will therefore also become a stress test for the European Union."
She called on the bloc to speak up for the values of "democracy, freedom and the protection of human dignity".
Europe could not tackle the world's problems alone, however, and she said the United States remained Europe's "most important partner".
"Of course I'm aware that the cooperation with America is currently more difficult than we'd like," Ms Merkel said, pointing to differences with President Donald Trump's administration on trade, climate change and the importance of international bodies like the World Health Organization.
Nevertheless, she said the transatlantic relationship was a "key pillar" of Europe's foreign policy and security interests that needed to be upheld and strengthened.
Germany had initially planned to put relations with China at the centre of its six-month EU Council presidency before the pandemic pushed its way to the top of the agenda.
The German leader, who is in the twilight of her chancellorship, said it was important for the bloc to maintain "constructive dialogue" with the increasingly assertive Asian giant -- seen as both a vital trading partner and a major rival.
The European Union has "a great strategic interest" in working with China and "actively shaping" the relationship, Ms Merkel said.
The chancellor said she would push for progress on a long-sought investment agreement with Beijing, aimed at levelling the playing field between Chinese and European firms, as well as tackling climate and health issues.
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