Beijing Talks: EU and China Press for Progress Amid Rising Trade Tensions

BRUSSELS — EU trade commissioner Maros Sefcovic is set to travel to Beijing on Thursday for a two-day round of high-stakes negotiations with Chinese officials aimed at preventing the two sides from sliding into a trade war.

The European Union has sharpened its tone toward Beijing as it seeks to protect its companies from what Brussels views as unfair competition in strategically important industries, including automobiles.

A growing number of European policymakers and analysts are warning of a “China Shock 2.0,” a term used to describe the rapid rise of Chinese companies in advanced manufacturing sectors, which they argue is putting long-established EU industries under pressure.

The original “China shock” of the early 2000s was triggered by a surge of inexpensive, largely low-tech Chinese exports that hurt producers not only in Europe but across the globe.

EU and Chinese officials have been engaged in talks since June to address Brussels’ concerns over the widening trade imbalance.

At the same time, the EU is moving to expand its trade-defense toolkit, although Beijing has warned it would retaliate against any measures it perceives as targeting China.

Sefcovic earlier in the summer underscored the urgency of the current round of discussions by saying the EU expects “tangible results by October” from the talks.

Still, analysts have urged caution about how much can be achieved in the coming days.

“There may be a few crumbs, but I would not expect any kind of major breakthrough,” said Penny Naas, director of the Brussels office of the German Marshall Fund of the United States, a think tank.

“There could be agreements on some specific issues, rather than any broad settlement of the trade relationship,” said Zhu Tian, a professor of economics at the China Europe International Business School in Shanghai.

Brussels clearly understands that negotiations alone will not resolve all of its concerns. The European Commission is also working on new measures to shield European industries, which are expected to be presented to EU leaders in December.

Concerns over trade imbalances

A central aim for the EU is to reduce its trade deficit with China.

The gap reached roughly 360 billion euros in 2025, meaning the EU imported far more from China than it exported to the country. China calculates a smaller deficit of about $292 billion and expects the imbalance to widen further this year.

Denis Redonnet, the EU’s trade enforcement chief, said sectors experiencing “sustained and abnormal” increases in imports include machinery, textiles, basic metals and chemicals.

He told Members of the European Parliament last week that “potentially worrying trends” were visible in almost a quarter of all imports into the EU, driven mainly by Chinese products.

Sefcovic said the EU wants to pursue three main goals, including addressing sharp increases in Chinese exports to the bloc, particularly in sensitive sectors, and boosting European exports to China.

Brussels is also seeking “a system of export licensing for rare earths and other products” after China, a leading producer, introduced restrictions on their exports last year.

Europe hopes to manage Chinese exports through voluntary limits, such as caps on hybrid cars sent to the EU, but one EU official said Brussels also wants to cover other products. Beijing has said it firmly opposes import quotas.

China has limited flexibility because of sluggish domestic demand, which has led its government to rely more heavily on exports to sustain growth.

Seeking new levers

Given that the EU does not anticipate major concessions from Beijing quickly, the official, speaking on condition of anonymity, said Brussels is pressing ahead with preparations for new trade tools.

Several EU countries, including France, have called for a “European equivalent of Section 301” — the trade mechanism used by US President Donald Trump to investigate foreign practices deemed discriminatory and respond with tariffs.

In response to reports last week on such a tool, Beijing said it would “respond resolutely” to “discriminatory restrictive measures.”

The EU recognizes these are not empty warnings. China has previously retaliated against EU trade-defense actions by imposing duties on European cognac and launching anti-dumping probes into pork and dairy products.

Brussels is also developing a measure that would help companies, through funding, diversify their supply chains in key sectors.

However, it remains unclear how far the EU as a whole is prepared to move against China, particularly given concerns about provoking Beijing.

Germany, whose largest trading partner is China and whose economy is heavily exposed to Chinese competition, has been especially cautious. Yet Berlin’s position has grown harder as it worries that Chinese overcapacity is damaging its export-led model.

Europe has “the ability to do something more aggressive to stem this China 2.0 shock,” Naas said. “The question is, will they?”

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