EU Trade Chief Heads To Beijing For High-Stakes Talks To Avert Trade War

EU trade chief Maros Sefcovic will travel to Beijing on Thursday for two days of high-stakes talks with Chinese officials, as Brussels seeks to prevent escalating trade tensions from turning into a wider trade war.

The European Union has taken a tougher stance toward China in an effort to protect European businesses from what it considers unfair competition in strategic sectors, including automobiles.

European leaders and trade experts are increasingly warning of a potential “China Shock 2.0,” referring to the growing shift by Chinese companies toward high-tech manufacturing and its potential impact on traditional European industries.

The first China shock in the early 2000s was driven by a surge of cheaper, lower-tech Chinese exports that hurt manufacturers in Europe and other parts of the world.

EU and Chinese officials have been negotiating since June to address Brussels’ concerns over the bloc’s growing trade imbalance with China.

At the same time, the EU is preparing to expand its trade-defense tools. Beijing, however, has warned it could retaliate against measures targeting Chinese products.

Sefcovic raised expectations for the talks during the summer, saying the EU expected to see “tangible results by October.”

However, analysts have cautioned against expecting a major breakthrough.

“There may be a few crumbs, but I would not expect any kind of major breakthrough,” said Penny Naas, director of the Brussels office of the German Marshall Fund of the United States.

Zhu Tian, an economics professor at the China Europe International Business School in Shanghai, said the talks could produce agreements on specific issues rather than a broad settlement of EU-China trade relations.

Brussels is also working separately on new measures to shield European industries, with proposals expected to be presented to EU leaders in December.

EU Seeks To Narrow China Trade Deficit

A key objective for the EU is to reduce its trade deficit with China.

The deficit reached around 360 billion euros in 2025, reflecting the significantly higher value of EU imports from China compared with exports to the country. China’s corresponding figure was around $292 billion and is expected to increase further this year.

EU trade enforcement chief Denis Redonnet said machinery, textiles, basic metals and chemicals were among the sectors experiencing “sustained and abnormal” increases in imports.

He told the European Parliament last week that potentially worrying trends were emerging in almost a quarter of all EU imports, driven largely by Chinese goods.

Sefcovic has outlined three main objectives for the EU, including addressing surging Chinese exports to the bloc, particularly in critical sectors, while seeking greater access for European exports to the Chinese market.

Brussels also wants an export-licensing system for rare earths and other strategic products after China imposed restrictions on some of these exports last year.

The EU is exploring voluntary limits on certain Chinese exports, including hybrid cars shipped to Europe, while also considering extending such arrangements to other products. Beijing has opposed import quotas.

China faces limited room for policy adjustments because of weak domestic demand, increasing its reliance on exports to support economic growth.

EU Considers Diversifying Suppliers

With Brussels not expecting major concessions from Beijing, the EU is also moving ahead with plans for additional trade-defense measures, according to an EU official who spoke on condition of anonymity.

Several member states, including France, have backed a possible European equivalent of the US Section 301 trade tool, which allows Washington to investigate foreign trade practices it considers discriminatory and potentially impose retaliatory tariffs.

Beijing responded to reports about the proposed EU measure by warning that it would “respond resolutely” to what it described as discriminatory restrictions.

China has previously retaliated against EU trade-defense measures, including imposing duties on European cognac and launching anti-dumping investigations into European pork and dairy products.

The EU is also developing a mechanism to help European companies diversify suppliers in critical sectors through financial support.

However, it remains uncertain how far the bloc will go in confronting China, amid concerns that stronger measures could trigger retaliation.

Germany, whose economy is particularly exposed to China because of its close trade ties, has taken a cautious approach. Berlin’s position has nevertheless hardened amid concerns that Chinese industrial overcapacity is putting pressure on its export-driven economy.

Europe has “the ability to do something more aggressive to stem this China 2.0 shock,” Naas said, adding that the key question is whether EU governments will choose to do so.