Tensions between China and the EU have intensified in recent months, prompting the European Commission to gather most of ’'s commissioners for a strategic reassessment during a “ orientation debate on Friday.
In a statement following the discussion, the Commission said “China is a critical partner and participation and dialogue will continue. At the same time, the current state of trade and investment relations is not sustainable.“
Calling the relationship “ non-sustainable” may indicate the depth of the break less than it is.
Relations have deteriorated steadily since European Commission President Ursula von der Leyen’ described Pekin’i ’ as a systemic competitor in her landmark 2023“ speech. But tensions rose to a new level when EU policymakers finally resolved their differences over the EU-US trade deal that had consumed Brussels’i for months, freeing the bloc's greater focus on China’e.
Last year, the bloc registered a record trade deficit of 359.9 billion euros with Beijing’le, and Brussels fueled growing calls at ’ to better protect the EU market from cheap Chinese imports, which threaten all sectors, including the metals, chemical and automobile industries.
Speaking to Euronews’e on condition of anonymity, an EU official, “, said that over the past few weeks we have seen a panic attack in China’. The Chinese issue has been ignored for too long, “ added.
2024In the EU industry since ’, – has lost a total of 200,000 European jobs, especially in the energy-intensive and automotive sectors; Automobile construction alone is projected to lose another 600,000 jobs in this decade.
On Friday, the commission said that the “comprehensive approach remains risk-reducing rather than discriminating, signaling that the bloc is pursuing targeted efforts to reduce its dependence on China”e, rather than severing economic ties altogether. But the risk of a full-scale trade war has never been more realistic.
Here are five key points on how the situation got to this point and where it could go next:
1. Fines andthe Regulatory Printing
During the previous legislative period, the EU adopted a law that angered Beijing ’, especially measures aimed at curbing foreign direct investment. And China has stepped up its fight against the so-called dumping’e, where public subsidies are used to lower the price of competitors through exports sold below market prices in ’.
The European Commission has become increasingly ambitious to counter China’'s subsidized approach, including imposing tariffs on imports of battery-powered electric vehicles. Various product-specific researches are also ongoing.
Earlier this week, the Commission fined Chinese e-commerce giant Temu’ya €200 million for selling unsafe products, and JD.com launched a large-scale investigation into ’'s acquisition of e-commerce retailer MediaMarkt’.
EU lawmakers and governments are also discussing this issue. the Industrial Accelerator Act, global market share in a particular sector. A proposed law that would impose strict conditions on investments in batteries, electric vehicles, solar panels and critical raw materials from the countries that control its ’.
A separate proposal (a renewed Cyber Security Act) could push Chinese equipment suppliers such as Huawei and ZTE away from critical infrastructures.
2. A more systematic approach
In April, the EU agreed to double tariffs on steel imports exceeding EU quotas to counter China’'s overcapacity. The measure is a so-called ’ security measure, a tool backed by some of AB’'s largest economies, including France, Italy, Spain, the Netherlands and Lithuania, which calls for expansion into sectors beyond metals.
In a statement, these countries argued that the protection measures were more “chevik” than other EU vehicles targeting cheap export products. The document also calls for economic security to be taken into account in assessing AB’'s interests when deciding on commercial defence measures.
The European industry is also increasing pressure on China's cheap imports of ’, and the Commission calls on ’ to use its commercial defense measures as “, which is more flexible, faster and preventive.
An important wake-up call for EU policymakers was that Dutch-based chipmaker Nexperia’, acquired by Chinese giant Wingtech, remained in the crossfire of US-China trade tensions and caused serious disruptions in the automotive sector.
The Commission is now preparing to demand that sectors such as the auto industry diversify chip suppliers in certain situations and consider supply chain risks in purchasing decisions.
Despite these various initiatives, EU policymakers have begun to be cautious that current rules are moving too slowly for a fast-moving competitor. After taxes were imposed on electric vehicle batteries, China’'s focus shifted to hybrid vehicles.
Brussels is now moving towards a more systematic approach and sees trade defence as a toolbox for rebalancing relations with China. One of the potential additions is the overcapacity tool to limit imports in certain sectors.
3. China’'s threats of retaliation
Over the past few weeks, China has was threatenedThe EU could retaliate if it continues to close its market to Chinese goods.
Both the “Made in Europe” legislation and the Cyber Security Act Beijing drew ’'s anger, leading to intense lobbying in Brussels and EU member states with warnings that the implementation would trigger a reaction.
Europeans are walking a tightrope, aware that their decisions could trigger a trade war. After AB’ imposed tariffs on ’ electric vehicles in 2024, Beijing also imposed tariffs on EU pork, brandy and dairy products.
At a press conference Thursday, Chinese Foreign Ministry spokesman Mao Ning said “International trade is a two-way street. There is no mandatory trade. China-EU trade relations are inherently based on a win-win relationship. China does not target trade surpluses, ” said.
Ning said “AB’ needs to put its trade ties with China into perspective and honor its commitment to free trade. China will closely follow AB’'s moves and take all necessary measures to protect legitimate rights and interests, ” added.
Some argue that it is too late for Europeans, who depend on China’ for key components of their supply chains - components that Beijing’ can weaponize at will.
In 2025, China blocked the export of rare earth elements vital to AB’'s green technology and defense, as well as the chips required for the European automobile industry. Beijing can also benefit from operating licenses for EU companies and restrict access to its market at any time.
4. Departments of Europe
Europe is far from uniting on China.
Despite its troubled trade deficit with Beijing’, Germany has been slow to move away from a co-operation approach that prioritizes securing German companies' access to the market in China’.
Berlin did not endorse the non-paper agreement last weekend, backed by other major EU economies. Instead, German Economy Minister Katherina Reiche reiterated this week that Germany's ’'s top priority is to avoid jeopardizing exports to China’e.
But the economic cost of Beijing ’e dependence may force Berlin’i to reconsider its stance. The German government is reportedly weighing a tougher line that will signal a significant shift in Chinese policy.
For years, German industry had a relationship with the Chinese market, which critics described as poisonous; This relationship has hampered any meaningful attempt to rebalance the trade deficit for fear of losing commercial access to the broad Asian market.
Spain has become the other major EU country that is reluctant to take action against China’. With relatively cheap energy costs, Spain has become attractive to foreign investors, for which Beijing’ has a growing share.
After initially appearing to support the French-led non-newspaper organisation, he withdrew and claimed to have only participated in the debates, his stance this week has been a source of embarrassment for Madrid.
Spain's Trade Minister Carlos Cuerpo, “, said there was no special political support for anything off-paper” and added that AB’ should establish “ contact with Chinese officials via ”dialogue“.
5. What's going to happen now?
The reassessment process of ’'s attitude towards China’ has been under construction for a long time, based on decades of deepening economic dependence. But the latest acceleration also resulted from a change in the stance of ABD’; The most prominent was President Donald Trump's recent visit to Beijing.
Friday's orientation debate by the commission was only the first step in a process that could translate into a broader repositioning. Given internal divisions and the threat of retaliation, it remains deeply unclear where this will lead.
The results of this exercise are expected to contribute to the debate on economic security at the next European Council meeting in ’ on 18-19 June. China has been on the agenda of EU leaders several times in recent years, but has been pushed aside due to more urgent crises.
While Brussels is considering adding new tools to its policy toolbox, political will remains the main determining factor. Nowhere is this gap as sharp as in the way AB’ uses the anti-pressure tool, also known as “trade bazooka”, designed to counter economic pressure and unfair trade restrictions.
Although we were under a lot of pressure, the anti-pressure vehicle was never used, “ said. “We really need the tools we're willing to use.”
