May take a tougher stance on China: “Unsustainable situation”

TT

Published 05.45

 

EU Commission President Ursula von der Leyen and Chinese Premier Li Qiang at a meeting in Beijing last year. Archive photo. Photo: Andres Martinez Casares/AP/TT

Tariffs, quotas and investment scrutiny are pitted against increased state aid at home as the EU seeks ways to meet competition from China.

Germany’s stance will be crucial in deciding whether the headache should be treated with painkillers or radiation.

The European Commission has already promised to present further measures in the autumn of 2026 to protect European industry from what it considers unfair competition.

The reason is primarily China, whose trade surplus with the EU is growing larger and faster. And also with the rest of the world.

“China currently accounts for 30 percent of global production but only 13 percent of consumption. It is an imbalance that the world simply cannot swallow,” Sabine Weyand, the outgoing head of the Commission’s trade directorate, stated in a speech to an EU Parliament committee in early May.

Radiation therapy?

The only question is how the EU will act. The way forward will be set out when the Commission holds an internal meeting on relations with China on Friday. This will then be followed up with a discussion with the heads of state and government of the member states at the summit in Brussels in midsummer.

Foreign Minister Kaja Kallas has already attracted attention when she recently spoke in Tallinn about the EU’s ability to use either “morphine” or “radiation treatment” – either to ease the pain at home through more support for industry or to take tougher measures against Chinese direct investment and procurement.

“It will be painful. . . because there will be countermeasures, warned Kallas – who was then accused by various critics of equating China with cancer, something she strongly denied, however.

Protectionism?

Heavy industrial countries such as France and Italy want to see tougher measures and are calling in a joint document with the Netherlands, Spain and Lithuania for “additional tariffs or quotas”, reports the news site Euractiv.

Sweden, in turn, is warning against overly protectionist responses.

– I notice that quite a few European countries, unfortunately, risk using the China issue to push for general protectionist barriers, said Trade Minister Benjamin Dousa (M) on site in Brussels last week.

Germany’s opinion could be decisive. After both the government and industry have long wanted to avoid clashing with China, there are now signs that competition problems and layoffs may force a change.

– This is an unsustainable situation, says Engin Eroglu, a German liberal and chairman of the EU Parliament's China delegation, to the news site Politico Europe.
 

FACTS

EU and China

China has the world's second largest GDP (20,852 billion US dollars) and also has the second largest population (1.4 billion inhabitants).

However, the EU as a whole has a slightly larger GDP (23,034 billion US dollars) despite having "only" the third largest population (450 million inhabitants).

In terms of trade, China has a gigantic and growing surplus with the EU in terms of goods (360 billion US dollars in 2025) while the EU has a smaller and decreasing surplus in terms of services (21 billion US dollars in 2025).

Sources: International Monetary Fund, European Commission