Beijing:The European Union and China are at a critical juncture in their economic relationship, as the EU considers implementing market access restrictions aimed at addressing issues like state-subsidized overcapacity and economic dependency. This move has prompted warnings from Beijing about the potential for a trade war.
According to Anadolu Agency, European and Chinese trade officials are convening in Beijing for a second round of discussions to tackle growing structural imbalances in trade. These talks follow an initial meeting in Brussels in June, where topics such as trade rebalancing, export control, and WTO reforms were on the agenda.
The discussions are taking place against the backdrop of the EU's Industrial Accelerator Act (IAA), which seeks to enhance industrial production within the bloc. The IAA, which includes measures targeting China, proposes rules to protect and boost key industrial sectors by enforcing strict origin rules in public procurement and offering incentives for local producers. China has criticized these measures, arguing they could create investment barriers and discriminate against Chinese firms.
France and Germany have urged the European Commission to adopt new trade protection tools, including immediate market access suspensions. This call comes as Europe's trade deficit with China has more than doubled over the past decade, reaching $359.8 billion in 2025. While EU imports from China increased by 6.4%, exports to China declined by 6.5% last year.
Manufactured goods, particularly electrical equipment and industrial machinery, dominate Chinese imports to Europe. European policymakers are concerned about Chinese manufacturers gaining substantial market share in sectors like automobiles, chemicals, and electronics. European Commission President Ursula von der Leyen recently warned of a "second China shock" similar to the 1990s steel crisis.
In response to these concerns, the EU is developing new trade defense tools, including a rapid-response mechanism to counter economic coercion and rules requiring European companies to source materials from multiple countries. Proposals also include a solidarity fund to protect European producers and potential tariffs akin to those under the US Trade Act of 1974.
China has warned that the EU's proposals could lead to unfair competition and breach WTO rules, potentially sparking a trade war. The Chinese Commerce Ministry highlighted concerns about barriers to investment in strategic sectors such as batteries and electric vehicles.
Chinese officials have emphasized the importance of defending multilateralism and free trade, warning that politicizing trade will disrupt global supply chains. The EU negotiation delegation plans to update European leaders on the Beijing talks' outcomes during the European Council summit next week, with potential enforcement of new trade measures as early as December.