EU sharpens its weapons against China’s trade surplus

Brussels has delivered a serious warning to Beijing: unless talks produce concrete progress by October, the European Union may use retaliation measures to curb China’s growing trade surplus. That surplus reached €360 billion last year, according to the article.

“Dialogue with China remains necessary. But it must produce results,” European Commission President Ursula von der Leyen told business and political leaders at the annual conference of France’s employers’ federation. “But when dialogue is not enough, we must be prepared to make full use of our instruments.”

The Commission has kept the negotiations largely out of public view. A technical delegation traveled to Beijing this week to narrow differences. Trade Commissioner Maros Sefcovic is expected to speak by video with his Chinese counterpart, Wang Wentao, before the October deadline, and then travel to China ahead of an EU leaders’ summit in Brussels.

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Dialogue with China remains necessary. But it must produce results.

Until now, the EU has followed a policy of “derisking, not decoupling”. The aim is to reduce excessive economic and technological dependence on China while protecting European supply chains from geopolitical shocks. The article points to China’s control of much of the world’s critical rare earths, which are essential for electric motors, and to Beijing’s export licensing regime for several of them.

The figures are increasing pressure on Brussels. Over the past decade, exports to China rose 37.5%, while imports increased 89%. France is leading calls for a harder line, and Germany, traditionally cautious because of its car industry’s reliance on Chinese raw materials, is now prepared to consider trade retaliation.

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But when dialogue is not enough, we must be prepared to make full use of our instruments.