EU China trade policy faces calls for tougher stance on deficits

The European Union’s trade relationship with China has reached a breaking point, with policymakers and economists now openly demanding a fundamental overhaul of Brussels’ approach to one of its most consequential economic partnerships. The EU’s trade deficit with China hit a staggering €291 billion in 2023, a figure that’s reshaping the political conversation across the bloc’s 27 member states.

A deficit that’s hard to ignore

For years, European officials tolerated growing imbalances in exchange for access to Chinese markets and cheap manufactured goods. That calculation is changing fast. Germany, France, and Italy — the bloc’s three largest economies — are now aligned on one point: the current framework isn’t working. Chinese exports of electric vehicles, solar panels, and steel have flooded European markets at prices that domestic producers simply can’t match. And European companies haven’t seen reciprocal access in Beijing.

“We need trade instruments that reflect the reality of asymmetric market access,” said a senior EU trade official, speaking on condition of anonymity. “The old approach of dialogue without consequence has run its course.”

Tariffs and investigations already underway

The EU hasn’t been entirely passive. Brussels launched an anti-subsidy investigation into Chinese electric vehicles in late 2023, and provisional tariffs of up to 38.1% were slapped on Chinese EV imports by mid-2024. It’s a significant escalation by European standards. But critics argue it’s too narrow, too slow, and too easily reversed under diplomatic pressure.

China accounted for roughly 22% of all EU goods imports last year, while European exports to China fell for the second consecutive year. That’s not a trade relationship — that’s a one-way street dressed up in the language of partnership.

Political will is building, but slowly

The debate inside the European Commission is sharper than it’s been in a decade. Some member states, particularly those with deep manufacturing bases, are pushing for broader use of the EU’s Foreign Subsidies Regulation and tighter screening of Chinese investment. Others, especially smaller export-dependent economies, worry about retaliation. China didn’t hesitate to target Lithuanian exports after Vilnius allowed Taiwan to open a de facto embassy in 2021.

Still, the political math is shifting. The European Parliament’s new composition after the 2024 elections leans more skeptical of Beijing than its predecessor.

That skepticism matters when trade commissioners are seeking a mandate for tougher negotiations.

What comes next

The EU is expected to finalize its updated China strategy later this year, with trade enforcement tools likely to feature prominently. Whether that translates into meaningful pressure — or another round of summits with polite communiqués — remains the central question. China is watching closely and has made clear it won’t accept what it calls “protectionist” measures without a response. The next 12 months will test whether Europe’s economic sovereignty ambitions are real, or just good politics.