Can Europe stand up to China on trade? | The Economist

TL;DR

Europe's top trade official argues the EU-China trade imbalance is unsustainable but resists confrontation, favoring structured dialogue over trade weapons.

Key Points

• 1.The EU-China trade deficit runs at €1 billion per day. Over the last five years, Chinese exports to Europe grew ~50% while European exports to China fell 30%, and European firms are also being squeezed out of third-party markets.
• 2.China now produces 30% of all global industrial output but consumes only 13%. The UN projects China's share of global industrial production could reach 45% by 2030, meaning an enormous surplus must be exported — and with the US closing off, Europe is the last large open wealthy market.
• 3.Europe attempted a 'jiu-jitsu' move requiring Chinese factories in Europe to use local components, hire local workers, and transfer technology. China responded with threats of countermeasures, calling the conditions totally unacceptable, showing Beijing is prepared to fight hard on trade terms.
• 4.The EU's trade commissioner insists on engagement over confrontation despite acknowledging the imbalance is 'simply unsustainable.' He says the EU will fight for every factory and job, use WTO-compliant safeguard measures if needed, but refuses to send threatening messages, preferring sector-by-sector dialogue with Chinese counterparts.