EU trade chief Šefčovič to hold two days of Beijing talks to avert trade war

Mixed · 2EU trade chief Maroš Šefčovič will travel to Beijing on Thursday 8 October for two days of meetings with Chinese officials, described as make-or-break, to try to stave off a trade war. 1 2 Mixed · 2The EU has toughened its stance towards Beijing to defend businesses against what it believes is unfair competition in critical sectors including cars, and European leaders and observers increasingly warn of a "China Shock 2.0", a shift by Chinese firms into high-tech manufacturing that threatens traditional EU industries. 1 2 Mixed · 2EU and Chinese officials have been in talks since June about Brussels' concerns over the trade imbalance, and Šefčovič warned in summer that the EU expected "tangible results by October". 1 2

Mixed · 2The EU's aim is to cut its trade deficit with China, which hit about €360 billion in 2025; China puts its own figure lower, at around US$292 billion, and expects the deficit to rise further this year. 1 2 Mixed · 2Šefčovič set three main objectives, including tackling export surges from China in critical sectors and increasing European exports to China, and Brussels also wants an export licensing system for rare earths and other products after China introduced restrictions on them last year. 1 2 Centre · 1EU trade enforcement chief Denis Redonnet told the European Parliament last week of "potentially worrying trends for almost a quarter of all imports into the EU", driven mainly by Chinese goods, with machinery, textiles, basic metals and chemicals facing "sustained and abnormal" import increases. 2

Mixed · 2Europe hopes to manage Chinese exports through voluntary limits, for example on hybrid cars, and an EU official said Brussels wants to extend this to other products, but Beijing has said it firmly opposes import quotas. 1 2 Mixed · 2Experts expect little: Penny Naas of the German Marshall Fund said there "may be a few crumbs" but no major breakthrough, and Zhu Tian of CEIBS in Shanghai foresaw agreements on specific issues rather than a broad settlement. 1 2 Mixed · 2In parallel, the Commission is preparing new tools to protect European industry, expected to be presented to leaders in December, including a funding tool to help firms diversify suppliers; several states including France have pushed for a European equivalent of the US Section 301 trade tool. 2 1

Mixed · 2Beijing has warned it would "respond resolutely" to "discriminatory restrictive measures"; China has previously retaliated against EU trade defence moves with duties on European cognac and anti-dumping probes into pork and dairy. 1 2 Mixed · 2How far the EU as a whole will go against China remains unclear; Germany, whose biggest trading partner is China, has been cautious though its stance has hardened over concerns that Chinese overcapacity hurts its export-led economy, and China has limited room to manoeuvre given weak domestic demand. 2 1