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Brussels, Belgium – In a move to tighten its stance on trade, the European Union is pursuing a two-track approach that combines the enhancement of trade defences with continued dialogue with China. This development comes amidst concern over China’s increasing exports to the EU, which have been rising significantly in recent years.
As part of this effort, EU Trade Commissioner Maroš Šefčovič recently met with China’s Commerce Minister Wang Wentao in Brussels. The meeting served as a key opportunity for both sides to discuss issues related to trade and industrial overcapacity in China. The EU is seeking to address concerns about China’s export practices, which have resulted in the accumulation of industrial overcapacity, leading to increased competition for EU-based producers.
According to reports, the EU is considering the introduction of new instruments aimed at promoting trade diversification and limiting the impact of imports. These new measures could include the development of a ‘diversification instrument’ as well as the allocation of sectoral import quotas. The goal of these initiatives is to encourage EU-based companies to look for new markets and suppliers, thereby reducing reliance on Chinese imports.
The German government, which has historically maintained a relatively cautious stance on trade relations with China, appears to be shifting its approach. Chancellor Friedrich Merz, during a recent high-profile meeting, suggested that China should revalue its currency to address ongoing trade imbalances.
This call to revalue China’s currency, known as Renminbi, follows growing criticism from European policymakers regarding the significant trade deficits accumulated by the EU. The increased trade deficit has resulted from the surge in exports from China, which are largely driven by cheap production costs enabled by government subsidies.
While the exact details of the EU’s planned new measures remain uncertain, it is clear that Brussels is pushing for more effective trade defences against what it sees as unfair trade practices. In contrast to past approaches, the EU now sees itself as a more unified and assertive global player when it comes to trade policy.
As the EU and China navigate these complex trade issues, many analysts predict that both sides will face challenges and disagreements along the way. With the two-track approach now firmly in place, it remains to be seen whether EU Trade Commissioner Šefčovič and his counterparts in Beijing will be able to bridge significant gaps in their respective views on trade. Nevertheless, it appears that the EU is taking a more determined stance in addressing the pressing trade concerns with China.