EU, China Expand Trade Talks as 360 Billion-Euro Deficit Fuels European Anxiety
Updated
Updated · The Diplomat · Jul 21
EU, China Expand Trade Talks as 360 Billion-Euro Deficit Fuels European Anxiety
1 articles · Updated · The Diplomat · Jul 21
Summary
June 29 talks in Brussels between Maroš Šefčovič and Wang Wentao went beyond market access, covering export controls, intellectual property rights and WTO reform through a new EU-China consultation mechanism.
A roughly 360 billion-euro EU goods trade deficit with China in 2025 — still widening in early 2026 — has sharpened Brussels' concern that rising Chinese exports and falling European market share in China are unsustainable.
Germany shows the pressure most clearly: goods exports to China fell to a 10-year low in 2025, while German car exports to China were down 66% from 2022.
Brussels still backs de-risking rather than decoupling, reflecting a split between cooperation on trade and climate and fears of dependency, coercion and technological vulnerability.
The dispute now reaches beyond commerce, as the EU increasingly treats China not just as an economic competitor but as a systemic rival shaping global rules, standards and governance.
Is Europe’s 'de-risking' from China a strategy for survival or a managed decline into protectionism?
As Chinese tech outpaces European industry, is the EU's 'Made in Europe' plan already too little, too late?
While Europe defends the old world order, is China successfully building a new one with the Global South?
EU-China Trade Imbalance Hits Record High: Causes, Consequences, and the Urgent Push to Avoid a Trade War (2026)
Overview
In July 2026, the EU and China are holding urgent high-level talks to address an unprecedented trade imbalance that threatens to escalate into a broader conflict. The EU’s earlier attempt to fix the issue by imposing tariffs in 2024 failed to curb Chinese electric vehicle imports, leading to a more cautious approach. Now, both sides are committed to open dialogue, with key officials agreeing to exchange data and closely monitor trade flows. The immediate goal is to foster transparency and prevent further escalation, as both economic powers seek collaborative solutions to their complex trade challenges.