Daily €1bn Deficit with China Pressures EU; Hawkish Line Masks Divisions Among 27 Members

EU Trade Commissioner Šefčovič arrived in Beijing on the 8th for a two-day meeting with Chinese Commerce Minister Wang Wentao — the final window before the Commission's deadline demanding 'meaningful results by October.' What he faced was an EU goods trade deficit with China of €360 billion (approximately $410 billion). Calculated over time, that figure amounts to more than €1 billion flowing each day from the EU side to the Chinese side.

According to The Hindu, the European Parliament on the 7th passed a resolution demanding a tougher stance toward China by 454 votes in favor and 86 against, with the core demand being 'economic reciprocity and a disproportionate EU response.' Belgian MEP Hilde Vautmans, who oversaw drafting of the resolution, said bluntly before the vote: 'Europe has the economic strength; it is time to use it.'

Behind this pushback is a hard industrial ledger. According to China's General Administration of Customs data, in the first eight months of this year China's exports to the EU grew 15.3% year-on-year, while imports from the EU grew only 6.2%. In the view of MEPs and economists, large-scale Chinese subsidies and a surge of exports in core industries — from steel and batteries to electric vehicles — are squeezing European companies. European Commission President von der Leyen has called it another 'China shock' for Europe — the last such shock cost the U.S. manufacturing heartland hundreds of thousands of jobs in the early years of this century. The European Policy Centre warned in June that the batteries, solar panels, steel, electric vehicles, chemicals and machinery sectors are 'losing jobs and capacity on a massive scale.'

Beyond the parliamentary vote, the EU's two largest economies are trying to translate the hawkishness into action. According to a copy of a joint Franco-German letter to the Commission obtained by the Associated Press, the two countries proposed simplifying procedures to make it easier for the Commission to deploy the never-before-used 'Anti-Coercion Instrument' — a set of trade and investment restrictions targeting countries deemed to apply 'improper pressure' on EU member states or companies — which outside observers have dubbed a 'trade bazooka.'

Yet the pressures bearing on Germany and France themselves are not symmetrical. German car sales in China have plunged sharply, with major manufacturers including Volkswagen having announced large-scale layoffs; as early as February, France's High Council of Strategic Planning called for an additional 30% tariff on Chinese exports and pushed for euro depreciation against the renminbi — a position with no consensus support beyond Brussels.

The EU's 27 member states are far from aligned. Spain, the eurozone's fourth-largest economy, has in recent years taken a relatively moderate line toward China — with Prime Minister Pedro Sánchez visiting Beijing four times in three years. Tim Rühlig, a China analyst at the EU Institute for Security Studies, acknowledges that this means 'it is plainly obvious that merely defending against China is not the future,' but that to remain competitive over the next 15 to 20 years, 'you must protect yourself.' This paradox sketches out the EU's real dilemma on China policy: in the absence of any possibility of a comprehensive China decoupling along the lines of what was done with Russia, where exactly does the boundary between 'independence' and 'cooperation' lie?

China has used both actions and language to mark out its own boundaries. In responding to the Franco-German joint letter on the 8th, the Ministry of Commerce said the relevant countries should 'avoid instigating the European Commission into taking protectionist measures,' stating: 'Protectionism cannot enhance competitiveness; decoupling or severing supply chains will only harm others without benefiting oneself.' On the eve of Šefčovič's arrival in Beijing, China launched an anti-dumping investigation into EU exports of p-nitrotoluene — used in dyes and pharmaceuticals — the first concrete move after Beijing's warning last month that 'it would take retaliatory action.' The official outlet Global Times struck an even blunter tone in a commentary the same month: 'The EU does not have the ability to fight a trade war with China. If it really makes up its mind, then let it try.'

The resilience of the Chinese export machine is also backed by data. After the United States imposed additional tariffs last year, Chinese exports pivoted toward the EU, Southeast Asia, Latin America and Africa, yet still recorded a global trade surplus of $1.2 trillion in 2025. Max Zenglein, Asia-Pacific chief economist at the Economic Advisory Council, judged: 'China has been through multiple rounds of external pressure tests and has so far largely withstood attempts to force a course change.' A Bank of America economist added that, with bilateral relations seen as 'relatively stable' after the U.S.-China summit, the global spotlight is turning to China-EU relations. Zenglein believes that, at the EU negotiating table, China's investment in Europe — especially against the backdrop of EU member states competing to attract capital and jobs — may become a chip in Beijing's hand.

For China, the counterpunch is already unfolding on the operational level, with the p-nitrotoluene investigation only the latest move. Whether the EU can bridge the divisions among its 27 members and turn 'economic reciprocity' from a slogan into an executable tool remains to be seen.