The European Union (EU) will hold major talks on Friday to strengthen its trade defences against growing competition from Chinese companies. European leaders want to protect key industries from cheap Chinese imports that are flooding global markets.
After reducing trade tensions with the United States through the 2025 trade agreement, the EU has now shifted its focus towards China.
Europe Fears “China Shock 2.0”
Experts and several governments have warned about a possible “China shock 2.0.” They fear that low-cost Chinese products could hurt manufacturers across Europe and other parts of the world. European officials are especially worried about the rising trade imbalance with China.
Last year, the EU’s trade deficit with China reached around 360 billion euros ($420 billion). Chinese exports to Europe far exceeded European exports to China.
EU Warns About Job Risks
EU industry chief Stephane Sejourne said China built its industrial strength through years of state support and unequal market access. “China’s industrial dominance is not accidental. It is the result of decades of state subsidies and non-reciprocal market access,” Sejourne told EU ministers in Brussels.
He later warned that nearly 29 million European jobs could face serious risks because of the growing trade gap. He cited data from the European Central Bank.
EU Plans Stronger Measures
European Commission President Ursula von der Leyen has followed a “de-risk, not decouple” strategy since 2023. The policy aims to reduce Europe’s dependence on China while maintaining trade ties.
On Friday, von der Leyen and other EU commissioners will discuss ways to defend European industries from what Brussels calls unfair Chinese competition.
The EU also wants to expand trade ties with other countries, especially for rare earth materials. China currently dominates that sector globally. Europe became more concerned after China imposed strict export controls last year. The move exposed the EU’s heavy dependence on Chinese supplies.
Tariffs And Trade Barriers Under Discussion
The EU is preparing new rules to support local chip manufacturing. Officials are expected to announce those measures next week. Meanwhile, France, Italy, the Netherlands, and Spain have demanded tougher action against what they described as “unfair trade practices.”
Germany, however, remains cautious. Berlin fears that stronger action against China could hurt German exports such as cars and industrial machinery.
According to the Financial Times, Sejourne said the EU could increase tariffs and import quotas to protect sectors like chemicals, metals, and clean technology. EU officials are also discussing whether they need completely new trade measures to tackle the imbalance.
China Responds Strongly
China warned the EU against taking harsher trade steps. Foreign ministry spokeswoman Mao Ning said China “will take all necessary measures” to protect its rights and interests.
Trade Tensions Continue To Grow
The EU has already launched several anti-subsidy investigations into Chinese products in recent years. Brussels has also imposed higher tariffs on Chinese clean technology goods. Chinese investments in Europe are now facing tougher scrutiny as well.
On Thursday, the EU opened an investigation into Chinese e-commerce giant JD.com’s bid to acquire German electronics retailer Ceconomy. Officials suspect the deal may have benefited from Chinese government subsidies.