BRUSSELS — European Trade Commissioner Maroš Šefčovič opened two days of talks in Beijing on Thursday aimed at rebalancing a gaping trade deficit, with failure to reach a deal likely to test Brussels’ resolve to impose tougher trade restrictions.
The meeting marks the final round of an effort launched in June to reset the lopsided trading relationship, and will hinge on whether China’s Commerce Minister Wang Wentao is prepared to make substantial concessions.
If no agreement can be reached to narrow the EU’s €1 billion-a-day goods trade deficit, Brussels and Beijing could find themselves on a collision course. EU leaders will review the outcome of the talks at a summit in Brussels next Thursday, where they will consider next steps.
Arriving in China, Šefčovič said his goal was to balance what he called an unsustainable trade deficit. Heading into a meeting with Wang, he said it was crucial that the talks deliver “tangible outcomes.”
The discussions have zeroed in on cars, with Chinese exports increasingly eating into the market share of European automakers. In August, one in eight cars bought in the bloc was Chinese, thanks largely to a boom in sales of plug-in hybrid electric vehicles.
European negotiators have been pushing China to commit to some form of export restraint — in particular for hybrids. Unlike Chinese-made battery-electric vehicles, which were hit with extra countervailing duties in 2024, plug-in hybrids are not subject to such measures.
Without meaningful commitments from Beijing, the Commission has warned it will resort to unilateral trade restrictions. For cars, it is considering safeguard measures that would mix import quotas and tariffs to protect European automakers.
Chemicals are next. Industry Commissioner Stéphane Séjourné said Thursday that the Commission plans to introduce targeted safeguards on plastics and composite materials, subject to a request from EU governments that Brussels do so.
Wind in his sails
Šefčovič flew to Beijing with the backing of the leaders of Europe’s two biggest economies — France and Germany — to take a tougher approach to trade.
In a joint appeal on Monday, President Emmanuel Macron and Chancellor Friedrich Merz said the Commission should be given a freer hand to shut off access to the EU for goods from countries that distort the bloc’s single market.
While the two leaders did not mention China in their letter to Commission President Ursula von der Leyen, there was no mistaking the target of their proposed trade “kill switch,” which could be blocked only by a qualified majority of EU countries.
The EU already has a powerful trade weapon in its Anti-Coercion Instrument, designed to counter economic bullying by foreign powers.
But Brussels has yet to muster broad support from member countries to deploy it, most recently in January when U.S. President Donald Trump threatened to seize Greenland, a Danish territory.
The EU’s difficulty in responding swiftly to trade threats has heightened concerns about a surge in Chinese exports that European officials say benefit from unfair government subsidies. With Trump hiking U.S. tariffs, ever more Chinese exports are heading to Europe — increasing pressure on industries that are already being forced to retrench.
Europe’s heavy dependence on China for processed rare earths and other critical raw materials also leaves it vulnerable to retaliation should relations deteriorate.
“If we aren’t willing to fix the way our model works, then we’ll be destroyed,” said one EU diplomat, summing up the concerns flooding Brussels.
“What’s the point of having [more tools] if the Chinese can shut down our strategic production in a matter of days?”
Low expectations
Although Šefčovič entered the talks strengthened by the Franco-German letter, a second diplomat said they didn’t foresee a deal with Beijing this week.
“He knows that a lot of member states are behind the Franco-German push,” the diplomat said, adding that this “has been seen in China.”
But Beijing has little room to compromise, given its reliance on exports to sustain growth amid weak domestic demand and a prolonged property slump.
“The Chinese side is starting to recognize that there is a problem. But I don’t think they are ready to enter into a substantial deal,” said Gunnar Wiegand, a former head of the EU diplomatic service’s Asia-Pacific department.
Wiegand, now a visiting fellow at the German Marshall Fund, said Šefčovič had earned a reputation as a dealmaker in talks on Britain’s exit from the EU and in last year’s trade deal with Trump. This time, however, “both sides are bound by their own circumstances,” he said.
Europe is desperate to halt the erosion of its industrial base, while China remains heavily dependent on exports to sustain economic growth.
“The Chinese are going to object to being singled out. Even if a deal with the EU would be the most rational solution, other important markets for Chinese exports, such as ASEAN countries, will start asking the same. It will undercut their global market,” he said.
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