Key facts
- The EU's trade deficit with China reached a record €1 billion ($1.13 billion) per day in April.
- EU leaders are preparing to discuss measures to address the widening trade imbalance.
- Options being considered include quotas on Chinese chemicals and hybrid cars.
- Industry groups warn of potential Chinese control over component supply and pricing.
- China denies unfairly benefiting from state subsidies and points to EU companies manufacturing within its borders.
Chinese companies are anticipating more stringent regulations from the European Union as bloc leaders have agreed on the necessity of addressing the significant trade deficit with China, which has surged to over 1 billion euros ($1.13 billion) daily. Official data reveals the EU's trade gap with China reached a record €31.9 billion in April alone. This widening deficit, driven by a 6.3% increase in imports from China and a 6.5% decline in EU exports to China in 2025, highlights Europe's struggle to compete in key industries such as electric vehicles and basic chemicals.
Trade experts suggest this trend is likely to continue, with goods already in transit from China expected to further inflate the deficit in upcoming months. Industry representatives, like Alexander Julius of Eurometal, are urging EU leaders to recognize the threat to Europe's industrial base, warning that over-reliance on China could lead to the dictation of component availability and pricing, potentially impacting sensitive sectors like defense. The situation has drawn comparisons to a 'China Shock 2.0,' reminiscent of the U.S. experience following China's WTO entry.
The European Commission is exploring various measures, with quotas on imports of Chinese chemicals and hybrid cars considered more viable than tariffs due to the political complexities involved. Beijing has refuted claims of unfair state subsidies, asserting that a substantial portion of the surplus is generated by EU firms manufacturing within China and re-exporting to the bloc. French President Emmanuel Macron has been a vocal proponent of quicker action against subsidized Chinese industries, with France estimating a quarter of its exports are directly threatened by Chinese competition, a figure rising to a third for Germany. Despite these concerns, Chinese Vice Premier He Lifeng has recently expressed commitment to upholding international trade norms and addressing economic imbalances.