A new process to talk about the trade imbalance between China and the European Union carries no guarantee of success. But it’s the best news for EU-China relations in years.
Beijing and Brussels talk trade
When EU trade commissioner Maroš Šefčovič and China’s commerce minister, Wang Wentao, issued a statement after their meeting in Brussels on Monday, it was the first such joint EU-China communique since 2019. The fact that it took the threat of a mutually destructive trade war to make it happen is a sign of how badly the relationship has deteriorated since then.
Šefčovič and Wang launched a formal consultation process to address a widening trade gap between the EU and China that has fuelled fears in Europe about the future of key industrial sectors including car manufacturing. They said the EU-China Trade and Investment Consultations will focus on balancing trade and investment, export controls, intellectual property rights and reforming the World Trade Organisation.
Šefčovič said he wanted to see “tangible results” by the time he and Wang meet in Beijing in October, just before EU leaders are due to discuss the trade imbalance with China.
“My objective from the outset has been clear: to begin balancing the trade relationship between the EU and China. The gap is widening. China’s exports to the EU keep rising, while our market share in China keeps shrinking. This trend is not sustainable. The status quo is not an option,” he said.
EU leaders discussed the trade deficit, which has grown to €360 billion, at their summit in Brussels this month but deferred a decision on taking protective measures against China. Commission president Ursula von der Leyen is looking at options that include deploying some of the EU’s existing trade defence measures and possibly introducing new ones.
Beijing has made clear that it believes it is capable of surviving a complete freeze in trade with the EU and is ready with countermeasures that could include cutting off the supply of rare earth minerals and other inputs that are essential to advanced manufacturing. It was the impact of such restrictions that forced Donald Trump to climb down in his tariff war with China last year after American car manufacturers warned their factories could be forced to halt production within days.
The tariff war and subsequent trade negotiations between Washington and Beijing saw Chinese exports to the US fall by 20 per cent in dollar value in 2025. But China’s global trade surplus grew to a record $1.2 trillion, with exports to the EU increasing by 8.4 per cent, to southeast Asia by 13.4 per cent and to Africa by 25.8 per cent.
Back in 2019, the EU and China were poised to ratify a Comprehensive Agreement on Investment but that was shelved after a dispute over sanctions that saw Beijing targeting EU lawmakers. The relationship grew more distant during the coronavirus pandemic and plummeted after Russia’s full-scale invasion of Ukraine in February 2022 when the EU demanded that Beijing end its diplomatic and economic support for Moscow.
Under pressure from the Biden administration, the EU restricted the export of high-end semiconductor technology to Beijing and adopted a policy of “derisking” its economy from China. Brussels declined to form a common front with Beijing against Trump’s tariffs and while China stood up to the US, the EU signed an unequal deal at the US president’s golf course in Scotland.
Trump’s talks with Xi Jinping, which began with a sole focus on trade, have broadened into a process that could reshape the relationship between Washington and Beijing. Šefčovič’s talks with Wang are more modest in scope but they hold within them the potential for a broader reset of the relationship between the EU and China from which both sides could benefit.
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