Can Europe stand up to China on trade?
Can Europe stand up to China on trade?
Can Europe stand up to China – Relations between the European Union and China have grown strained in recent weeks, as Brussels seeks to counter Beijing’s dominance in global commerce. The EU’s efforts to shrink its trade deficit with China and lessen its dependence on key commodities and services have intensified, prompting concern about the continent’s economic future. This shift comes amid growing European worries over China’s alleged unfair practices in international trade, which are seen as undermining industries and displacing jobs across member states.
Industrial Strategies and European Responses
One of the EU’s key initiatives to address these challenges is the Industrial Accelerator Act, unveiled in March by the European Commission. The legislation aims to bolster the bloc’s industrial resilience by promoting a ‘Made in Europe’ procurement strategy, favoring local suppliers over foreign alternatives. It also targets the acceleration of decarbonization in sectors like manufacturing and automotive, while supporting the development of net-zero technologies. The plan has drawn sharp criticism from China, which warns of potential investment hurdles and claims the EU’s approach could lead to retaliatory actions.
“We will fight tooth and nail for every European job, for every European company, for every open sector, if we see they are treated unfairly,” said EU Trade Commissioner Maroš Šefčovič, emphasizing the bloc’s resolve to defend its economic interests.
Trade Deficits and Sectoral Shifts
Recent trade figures underscore the growing imbalance between the EU and China. In 2025, the EU’s exports to China totaled €199.6 billion, while imports from the Asian giant reached €559.4 billion, resulting in a trade deficit of €359.9 billion. This gap has widened compared to 2024, with EU exports declining by 6.5% and imports rising by 6.4%. Despite this, over the past decade, EU exports to China have expanded by 37.1%, and imports have skyrocketed by 89%, highlighting the region’s deepening integration with Beijing’s market.
The trade dynamics reflect the EU’s reliance on China for essential goods. While exports to China are primarily driven by machinery, appliances, vehicles, and chemicals, the bloc’s imports include high-tech components, solar panels, lithium-ion batteries, and magnesium—materials vital for Europe’s green and digital transformation. These imports have become a focal point of debate, as leaders grapple with balancing economic gains against the risks of overdependence.
Global Economic Powerhouses at Odds
The EU and China are two of the world’s most influential trade partners, yet their relationship is now at a crossroads. As of 2026, the two economies together account for roughly a third of the global gross domestic product (33-35%) and 30% of global trade. However, the scale of their trade deficit has raised questions about the sustainability of this partnership. China, which recorded a record $1.2 trillion trade surplus in 2025, has been accused of manipulating markets through state-backed industries and extensive subsidies. These practices, European leaders argue, have created an uneven playing field and contributed to industrial disruptions across the continent.
China’s objections to the EU’s new measures have been pointed. The Asian giant claims that prioritizing European suppliers would hinder its access to markets and create barriers for its companies. This critique echoes concerns raised by Beijing about the EU’s reliance on trade agreements and its push for greater autonomy in supply chains. Yet, the EU remains undeterred, with officials like Šefčovič vowing to protect domestic industries and ensure fair competition.
Supply Chain Diversification and Strategic Partnerships
Brussels has taken steps to reduce its dependence on China by forging new trade relationships. In 2026, the EU signed agreements with Mercosur, India, and Indonesia to diversify its supply chains. These deals are part of a broader strategy to lessen reliance on major powers while maintaining alignment on critical issues. However, the EU’s push for independence is not without challenges. Trump’s earlier tariff war in the United States has made European leaders more cautious about overreliance on a single trading partner, prompting a reevaluation of their positions.
Despite these efforts, many EU leaders continue to engage with China as a strategic ally. The continent’s dependence on Chinese resources and investment opportunities has kept ties strong, even as tensions rise. This duality is evident in the recent visits by high-profile figures, including French President Emmanuel Macron, Irish Prime Minister Micheál Martin, Finnish Prime Minister Petteri Orpo, Portuguese Prime Minister Luís Montenegro, German Chancellor Friedrich Merz, and European Commission President Ursula von der Leyen. These interactions underscore the complexity of the EU’s stance, balancing protectionist goals with the need for economic partnerships.
Historical Context and Future Outlook
For years, the EU has criticized China’s state-led economic model, citing issues such as industrial overcapacity and subsidies that distort global markets. However, despite these complaints, member states have struggled to agree on unified strategies to counter Beijing’s influence. The 2020 agreement in principle, which included provisions for market access, transparency in subsidies, and a ban on forced technology transfer, was a significant step but has since faced renewed scrutiny as trade imbalances persist.
As the EU seeks to de-risk its relationship with China, the question remains: who will take the first step in this escalating economic rivalry? The bloc’s latest initiatives, coupled with its growing trade deficit, signal a determination to assert its position on the global stage. Yet, the scale of China’s economic power and its deep ties to European markets suggest that the path to decoupling may be fraught with challenges. With the stakes rising, the EU must navigate a delicate balance between protecting its industries and maintaining its economic partnerships to avoid a costly split from one of its most vital trading partners.
