German Media: EU Summit: "De-risking" Too Slow — Massive Trade Deficit with China Unsustainable

The ongoing expansion of the trade deficit with China has raised concerns within the EU. The EU is considering strengthening its trade defense instruments, promoting supply chain diversification, reducing dependence on key Chinese goods and raw materials, while still emphasizing dialogue to resolve economic and trade disputes.

Although the EU summit conclusions did not explicitly name China, the discussion focused sharply on the growing trade imbalance between the EU and China, as well as the EU’s reliance on China for critical raw materials and supply chains.

European Commission President Ursula von der Leyen said after the meeting that the Commission would propose new legislation requiring EU companies to diversify their sources of critical supplies, thereby reducing supply chain risks. She stated that the ideal scenario would be for businesses to proactively accelerate de-risking efforts; in such a case, the proposed legal measures might become unnecessary.

Von der Leyen added that companies are currently advancing de-risking far too slowly. “We’ve already seen the data—there’s no need to say more. We must rebalance our relationship with China.”

EU leaders unanimously agreed that the bloc should continue maintaining “constructive dialogue” with major economic partners, while also calling on the European Commission to study further improvements to trade defense tools, ensuring the EU has sufficient means to protect its interests and mitigate risks.

German Chancellor Friedrich Merz stated that the European Commission should strengthen existing trade protection mechanisms and develop new policy instruments: “The EU must have effective tools to genuinely safeguard its interests globally.” However, Merz did not explicitly mention China in this context.

Record-High Trade Deficit with China

Despite China not being directly referenced in the summit conclusions, EU officials generally acknowledge that the biggest concern stems from the current economic imbalance between the EU and China.

Von der Leyen pointed out that the EU’s goods trade deficit with China reached approximately €360 billion in 2025—equivalent to about €1 billion per day—marking a record high, and for the first time, all EU member states recorded a trade deficit with China.

Austrian Chancellor Christian Stocker said: “A daily trade deficit of €1 billion is already enough to prompt action.”

European Council President António Costa similarly stated that a daily deficit of around €1 billion “is clearly unsustainable.” He added: “We can’t keep raising this issue without achieving tangible results. Unfortunately, so far, China has not presented any solutions.”

Increasing Dependence on Rare Earths Heightens EU Concerns

In recent years, the EU has grown increasingly concerned about its economic dependence on China. The bloc believes this not only increases the risk of supply chain disruptions but could also make Europe more vulnerable to economic coercion.

In 2025, China imposed export controls on rare earths. These elements are widely used in smartphones, televisions, electric vehicles, semiconductors, and wind turbines. Currently, the EU heavily relies on Chinese supply for rare earths, magnesium, and other critical raw materials.

Earlier this month, EU Trade Commissioner Valdis Dombrovskis advocated establishing a new mechanism for supply chain diversification, arguing that all high-risk industries should eliminate dependency on single suppliers.

EU Aims to Strengthen Trade Defense Tools

Besides concerns over raw material dependence, the EU also views Chinese firms’ unfair competitive advantage in global markets—fueled by substantial government subsidies—as a pressing issue. Brussels has previously imposed tariffs on Chinese electric vehicles and may exclude companies receiving excessive subsidies from public procurement. EU Industry Commissioner Nicolas Schmit also hopes to further expand these trade defense measures.

Aside from raw material dependency, cheap competition from China is exerting pressure on European industry. Supported by massive state subsidies, China exports extensively while importing relatively little, creating record-high trade surpluses. Beijing has recently reaffirmed in its new five-year plan that it will continue supporting strategic sectors such as semiconductors and artificial intelligence.

Divergent Views Within the EU on How to Respond to China

However, there remain divisions within the EU regarding how to respond to China.

Spanish Prime Minister Pedro Sánchez advocated a pragmatic approach and opposed open confrontation. He said: “We need friends, balanced relationships, and pragmatism. Whether dealing with major economies like China—or traditional allies like the United States—we should build bridges.”

Germany had previously taken a cautious stance due to concerns about potential retaliation from Beijing. However, the German government stated that if necessary, Berlin is willing to support the development of new trade tools—but these measures “should not target specific countries.”

Irish Taoiseach Micheál Martin said he wants to first understand the specifics and implementation methods of any new mechanism, and reminded Europe that it must thoroughly assess the consequences.

Belgian Prime Minister Bart De Wever said EU leaders agreed that if third-party countries take retaliatory actions, member states should stand united, as the impact of such retaliation varies across countries: “Some nations are particularly vulnerable, but all will be affected.”

EU Still Aims to Avoid Escalation Through Dialogue

At present, the EU has not disclosed any concrete plans for new trade tools. Von der Leyen said the EU hopes to jointly address global trade imbalances while maintaining unity among member states and continuing dialogue with China.

Source: DW

Original: toutiao.com/article/1868540263339084/

Disclaimer: This article represents the personal views of the author