EU Leaders Seek Stronger Trade Tools Against China's Economic Influence

European Union leaders are converging on a tougher stance toward China, driven by concerns over unfair trade practices and growing economic dependence. The European Commission is being urged to develop stronger tools to counter Beijing's influence, as the bilateral trade deficit in goods hit €360 billion last year and continues to widen. EU trade chief Maroš Šefčovič stated that the current trading relationship with China is unsustainable and requires rebalancing, not confrontation. Germany, the EU's largest economy, has recently fallen into a trade deficit with China, signaling a shift in sentiment. The Commission has initiated trade investigations and proposed new defensive measures in response to Chinese overcapacity and market distortions. Despite the tougher rhetoric, the EU is likely to avoid a full-blown trade war, such as activating its Anti-Coercion Instrument, due to concerns about damaging its already fragile economy. Instead, a twin-track strategy of intensifying dialogue with Beijing while maintaining the threat of action is being pursued. Discussions have included China's vice minister for commerce questioning the EU's intentions regarding a trade war. European Council leaders are set to discuss the path forward, with options ranging from wider use of import quotas and a diversification instrument to more aggressive measures like sweeping tariffs, though the latter faces challenges with World Trade Organization rules. Several EU member states have backed a position paper advocating for a harder line on unfair trade practices. Even Germany, historically cautious, is indicating a willingness to address trade-distorting practices by other nations.