The big novelty in the dialogue between the European Union and China is that, after their meeting last June, for the first time the Commission has set a clear horizon for engagement with Beijing. After its latest meeting with Wang Wentao, China’s Minister of Commerce, Maroš Šefčovič, the European Commissioner for Trade and Economic Security, explained that the European Union intends to secure tangible results from negotiations with China in October. The good news is that Brussels has already set a loose deadline on the calendar that prevents the talks from continuing sine die without a clear outcome. The bad news is that if there is no progress, it must translate into action, and pretending there is progress when there is none will condemn the EU to a rapid and painful deindustrialization.
“China has made clear that it intends to retaliate against any measures the European Union might adopt to protect its market and its industry.”
China has made clear that it intends to retaliate against any measures the European Union might adopt to protect its market and its industry. This has been seen before: tariffs on Chinese electric vehicles did not go unanswered by Beijing, which has also found ways to continue penetrating the European market. It has done so through plug-in hybrids and by advancing its expansion plans in Europe with factories that threaten to be mere assembly points to dodge sanctions.
The trade deficit between China and the European Union grows by one billion euros every day, turning it into an urgent matter for the EU’s heads of state and government. Not taking action is no longer an option. These leaders, gathered at the European Council in June, asked the European Commission to keep trying to negotiate with the Asian giant, but at the same time to prepare tools to shield the Union from Chinese trade practices. Beijing’s export strategy, which is giving rise to what is now known as the “China shock 2.0”, now affects sectors critical to the European economy, such as automobiles, machinery, and chemicals.
The information emerging from the meeting between Wang and Šefčovič points to a Chinese willingness to increase purchases of European products to balance the books. But there are many doubts in Brussels that Beijing will be able or willing to resolve all the imbalances behind the wave of cheap exports flooding the European market and the markets where European companies traditionally sold, causing a double squeeze. China has a highly devalued renminbi, with subsidies pushing toward overproduction and a very weak domestic demand that makes it impossible for the Chinese market to absorb enough of what it produces. To solve the “China shock 2.0” crisis, Beijing should move on all three fronts.
“To act, the European Commission needs a united front among European leaders that, as of today, does not yet exist”
To act, the European Commission needs a united front among European leaders that, as of today, still does not exist. Friedrich Merz, Germany’s federal chancellor, the key member state that has always opposed any measure that could trigger a trade war with Beijing, has gradually changed stance. In any case, there remain many cautious countries, with the Spanish government one of the most reluctant to a trade clash with China, although Spanish diplomatic sources admit that scenario cannot be ruled out in the future if there are no changes on the Chinese side.
Rare Earths and Other Dependencies
A matter of particular concern in Brussels is the supply of rare earths, which China has used in the past against the United States in the trade tensions between Washington and Beijing, with striking effectiveness. The Asian giant has demonstrated near-absolute power in the field of rare earths, key for new technologies and whose market it almost entirely controls: it controls 66% of mining and 88% of refining. The European Commission is working with special emphasis on plans related to the possible use Beijing could make of these minerals in the event of a trade shock.
“The Asian giant has demonstrated near-absolute power in the field of rare earths, key for new technologies and whose market it almost entirely controls”
The dependence on China in this area is not something that concerns the European Commission only within the framework of trade negotiations. When in 2023 Ursula von der Leyen, President of the European Commission, defended her new vision for relations with Beijing, focused on risk reduction, the German leader and her team had already begun to emphasize diversification. In fact, one of the measures the Šefčovič department is working on to strengthen the EU’s economic security, following the European Council’s mandate to prepare new tools to protect themselves commercially from China, is a diversification instrument to push European companies to be less dependent on the Asian giant.
In autumn 2025, the Union realized how close it is to suffering the worst consequences of that dependence: a clash between the Netherlands and China, after the Dutch government took control of the chip company Nexperia, originally Dutch but purchased by a Chinese company in 2019, which led to the cut of supply of its chips from the central Dongguan plant, putting many European automotive production chains on the edge of disruption.
Analysts and sources consulted expect von der Leyen to unveil part of the strategy regarding China in the true “hot autumn” ahead during the State of the Union address (SOTEU) that every September offers the President of the European Commission to detail her political agenda for the next twelve months.
