Key facts
- EU Trade Commissioner Maroš Šefčovič is meeting China's Commerce Minister Wang Wentao in Brussels.
- The EU is concerned about China's industrial overcapacity and its impact on European markets.
- China's trade surplus with the EU was €360 billion in 2025 and is up 10% year-on-year.
- Chinese car brands now account for nearly 10% of European car sales.
- The EU is considering new trade defense tools, including a diversification instrument and import quotas.
EU Trade Commissioner Maroš Šefčovič is meeting with China's Commerce Minister Wang Wentao in Brussels to address concerns over China's industrial overcapacity and its impact on European markets. The EU is seeking a negotiated solution where China reins in its excess production and relies more on domestic demand, rather than escalating into a trade war.
EU leaders have signaled support for a more confrontational stance, with China's trade surplus with the EU reaching €360 billion in 2025 and already running 10 percent above last year's pace. Chinese brands now account for nearly 10% of car sales in Europe, leading to reports of Volkswagen planning significant job cuts. The EU executive is pursuing a dual strategy of strengthening trade defenses, including proposals for local bidder preference in public procurement and restricting Chinese tech firms from strategic networks, while also keeping the door open for dialogue.
Discussions have included setting up a trade and investment consultation mechanism. The EU is also preparing new trade defense tools, such as a 'diversification instrument' to reduce reliance on China and sectoral import quotas. The Anti-Coercion Instrument, a trade 'bazooka,' has not been ruled out. However, securing member state backing for retaliatory actions remains a challenge, with some countries like Spain having courted Chinese investment.
Beyond trade defenses, discussions have touched upon currency revaluation, with German Chancellor Friedrich Merz suggesting China needs to adjust its currency. French President Emmanuel Macron also facilitated a discussion on 'macroeconomic imbalances' involving China. The broader rebalancing discussion is expected to continue at the G20 finance ministers and central bankers meeting in August.