Media: Will China and the EU Engage in a Trade War?

Electric vehicles, batteries, solar panels, and products from Chinese e-commerce platforms such as Pinduoduo's overseas version Temu and AliExpress are driving an expanding trade deficit between the EU and China, pushing Brussels to seek protective measures and raising concerns of a potential trade war. European leaders will hold a summit on Thursday, expected to discuss solutions to protect European industries. Beijing advocates dialogue but has also stated it is prepared for countermeasures.

How Large Is the Trade Deficit?

The European Commission said last month that the current trade deficit is "unsustainable." According to Eurostat data, the EU-China goods trade deficit alone reached €31.9 billion in April—over €1 billion per day on average. On Monday, EU Trade Commissioner Maroš Šefčovič stated: "Our trade relationship with China has reached a point where it needs to be rebalanced." He emphasized: "This is not about confrontation—it's about rebalancing."

In a letter sent at the end of May, Chinese Ambassador to the EU Cai Runchen expressed that China "fully understands Europe’s serious concerns," "has never deliberately pursued a trade surplus," and "is willing to do its utmost to help resolve this issue." He called for dialogue and listed measures already taken: increased openness toward European agricultural products, cancellation of VAT refunds for Chinese solar panel exporters, and restrictions on exports of Chinese electric vehicles.

In response to external criticism, China argued in early June that Chinese companies’ success is based on innovation, economies of scale, and industrial foundations, rejecting claims that their achievements stem from massive public subsidies.

What Is the State of Sino-European Relations?

According to AFP, relations between China and the EU have remained tense since early 2026, when Ursula von der Leyen sought to strengthen legislation targeting China. The EU fears Chinese dominance in certain sectors—such as electric vehicles, batteries, chemicals, and green technologies—could undermine its own industries, while also demanding greater market access in China. Since 2024, tariffs have been imposed on "Made in China" electric vehicles.

China strongly opposes the EU’s proposed "Industrial Acceleration Act." This legislation would exclude products manufactured outside the EU from public procurement and restrict acquisitions by European firms. China’s Ministry of Commerce pledged to take "countermeasures" if the act is passed.

The European Commission has also proposed revisions to cybersecurity rules, aiming to exclude suppliers deemed high-risk—such as Huawei—from telecommunications networks.

Are We Heading Toward a Trade War?

Experts differ in their assessments. Quoting Professor Xu Dingbo from CEIBS (China Europe International Business School) in Shanghai, AFP noted: "Emotions are running high, and the situation remains unstable. The risk of a trade war is very real."

Elvire Fabry, trade geopolitics expert at France’s Jacques Delors Institute, analyzed: "For today’s Europeans, demonstrating determination and establishing a balance of power is crucial."

However, economist Zhu Tian from CEIBS believes de-escalation benefits both sides: "Escalation helps no one—Europe faces higher costs and a slower green transition, while China risks losing a key market."

What Potential Retaliatory Measures Might China Face?

In recent years, following similar actions by Europe, China has imposed anti-dumping duties on brandy and launched investigations into pork and dairy products, severely impacting those sectors.

Zhu Tian pointed out: "China may respond with anti-dumping investigations, enhanced regulation, restrictions on specific industries, or pressure on politically sensitive European products."

He expects China to adopt a "moderate response"—one that is firm enough to signal to the EU that its measures come at a cost, yet not so harsh as to cause a complete rupture. The EU particularly worries that Beijing might restrict exports of rare earth elements, which are critical to its high-tech industries.

Is the EU Important to China?

The EU is the world’s largest single market, home to 440 million consumers, and China’s second-largest trading partner. For Chinese enterprises, the EU market is crucial.

Elvire Fabry noted that China "needs access to the European market."

Can Both Sides Compromise?

Zhu Tian stated: "Increasing imports from Europe could ease tensions and demonstrate China’s serious commitment to addressing EU concerns." He also advocated for greater Chinese investment in Europe, which would create jobs.

Jörg Wuttke, expert at Germany’s Federal Association of German Industry – Albrecht Bridge Group and former president of the China-EU Chamber of Commerce, said Beijing still has the ability to avoid a trade war—but "must truly open up, not just pretend to open up, because China has talked about opening up for decades."

Sources: rfi

Original: toutiao.com/article/1868247258196992/

Disclaimer: The views expressed in this article are those of the author(s) and do not necessarily reflect the position of the publisher.