Key facts
- EU Trade Commissioner Maroš Šefčovič is in Beijing for talks with China's Commerce Minister Wang Wentao.
- The talks aim to narrow the EU's €1 billion-a-day goods trade deficit with China.
- Discussions are focused on Chinese car exports, particularly plug-in hybrid electric vehicles.
- The EU is considering safeguard measures, including import quotas and tariffs, for cars if no agreement is reached.
- Targeted safeguards on plastics and composite materials are also planned for chemicals.
- French President Macron and German Chancellor Merz have backed a tougher EU trade stance.
European Trade Commissioner Maroš Šefčovič is in Beijing for crucial talks aimed at addressing the EU's significant trade deficit with China. The discussions, which mark the final round of an effort initiated in June, are set to determine whether Beijing is willing to make substantial concessions to rebalance the trading relationship. Failure to reach an agreement could push Brussels towards implementing stricter trade restrictions.
The EU's goods trade deficit with China currently stands at €1 billion per day. A key focus of the negotiations is the surge in Chinese car exports, which have increasingly captured market share from European automakers. In August, one in eight cars sold within the bloc was of Chinese origin, largely driven by sales of plug-in hybrid electric vehicles. Unlike battery-electric vehicles, which faced additional countervailing duties in 2024, hybrids are not currently subject to similar measures. The EU has warned that without export restraint commitments from China, it may resort to unilateral measures, including safeguard measures comprising import quotas and tariffs.
Discussions also extend to the chemicals sector, with Industry Commissioner Stéphane Séjourné indicating plans for targeted safeguards on plastics and composite materials, pending a request from EU governments. Šefčovič's tougher stance in Beijing is supported by French President Emmanuel Macron and German Chancellor Friedrich Merz, who have called for the European Commission to have greater authority to block goods that distort the EU's single market. Their proposed trade "kill switch" would require a qualified majority of EU countries to be overridden.
The EU's Anti-Coercion Instrument, designed to counter economic coercion, has yet to be deployed broadly among member states. Concerns are mounting over a rise in Chinese exports, which European officials claim are unfairly subsidized. This trend is exacerbated by increased U.S. tariffs, redirecting more Chinese goods to Europe and pressuring domestic industries. Europe's reliance on China for critical raw materials also poses a vulnerability to potential retaliation.
Despite the backing from France and Germany, expectations for a deal this week are low. Analysts suggest that China, facing weak domestic demand and a property slump, is heavily reliant on exports for growth and may not be ready for substantial compromises. Beijing also faces the challenge of potential repercussions from other markets if it agrees to EU demands.