EU Trade Commissioner in China to “redress an unsustainable deficit”

The European Commissioner for Trade, Maros Sefcovic, said on Thursday that he was in China to try to “rebalance the European Union’s (EU) unsustainable trade deficit” with the world’s second-largest economy.

Maros Sefcovic on Thursday began two days of talks in Beijing aimed at preventing an escalation, as the EU reiterates its determination to act in the face of a trade deficit with China that has stood at around one billion euros a day since 2025. He met Commerce Minister Wang Wentao, according to the latter’s office, which did not provide further details.

Brussels intends to secure concrete and meaningful measures in response to what European Commission President Ursula von der Leyen has described as a “tipping point.” Failing that, the EU is threatening to take firm action. China, however, has warned that it will respond if any measures run counter to its interests.

“First day in China, with one goal: to start rebalancing our unsustainable trade deficit,” Sefcovic wrote on social media. He met representatives of European companies whose “message was clear: we need to improve access to the Chinese market.”

European officials criticise the obstacles faced by their companies in China. They denounce what they see as massive subsidies granted by the Chinese state to domestic firms, as well as industrial overcapacity that is offloaded at low cost onto the European market, jeopardising entire sectors such as the automotive industry.

They are also alarmed by what they regard as the instrumentalisation of supply chains, along with the undervaluation of the Chinese currency. Beijing rejects all these accusations. Experts additionally highlight, beyond Chinese practices, the weaknesses and vulnerabilities of the European economy.

Chinese warnings

The Bank of China issued a statement on Thursday via state media, asserting that the expansion of the country’s trade stemmed from improvements in its industrial competitiveness. “China has neither the need nor the intention” to devalue its currency to boost trade, it said. To attribute, as some do, a decline in competitiveness or structural problems to other countries’ exchange rates “amounts to shirking one’s own responsibility,” it added, according to the Xinhua news agency, without naming any specific targets.

Mr Sefcovic’s visit is part of a dialogue that has been under way for several months and comes a few days before a summit of EU heads of state and government in mid-October. On that occasion, a Franco-German proposal will be presented, calling for Europe to equip itself, in addition to existing instruments, with a mechanism that would make it possible, within a matter of days, to exclude from the single market the goods and services of any country engaged in a trade war with the EU.

China is not explicitly mentioned. However, such a mechanism would anticipate a potential open trade confrontation. A spokesperson for the Chinese Ministry of Foreign Affairs, Mao Ning, reiterated on Thursday Beijing’s principled commitment to “dialogue on an equal footing” to resolve disputes.

However, Beijing had previously warned that Berlin and Paris risked “suffering the consequences themselves” if they continued “to encourage the EU to resort to protectionist tools at every turn.”

One of Europe’s concerns is that China could use rare earths as a weapon. These raw materials are essential to many strategic industries, and China dominates their extraction and refining. Europe is highly dependent on these materials and was severely affected by the export restrictions imposed by Beijing in 2025.

Hybrid vehicles

From the European perspective, the aim is to avoid reaching that point and to secure “initial concrete results” this week. European officials would like to obtain commitments from China to voluntarily reduce its exports in key sectors such as hybrid vehicles, and to secure enhanced access to rare earths.

It would be “unrealistic” to expect a comprehensive agreement, but “if we managed to identify a sector in which to trial an agreement on export limits with China, that would already be a step forward,” Ignacio Garcia Bercero, an expert at the Bruegel Institute, told AFP.

Like Europe, China – given its dependence on exports and its own domestic economic difficulties – has no interest in conflict, agrees Zhu Tian, a professor at the China Europe International Business School in Shanghai, who believes that “common ground is possible.”

“However, the differences remain considerable. We should expect negotiations to continue and agreements to be reached on specific points, rather than a comprehensive settlement,” he predicts.