International

Strategic Shifts

EU-China relations are at a crossroads as the two sides face rising industrial competition between them and tariff pressures from the US

By Yu Xiaodong Updated Oct.1

Chinese President Xi Jinping meets with European Council President António Costa and European Commission President Ursula von der Leyen during the 25th China-EU Summit held at the Great Hall of the People, Beijing, July 24 (Photo by Sheng Jiapeng)

On July 24, the 25th ChinaEU Summit was held in Beijing. Attended by Chinese President Xi Jinping and Premier Li Qiang, European Council President António Costa and European Commission President Ursula von der Leyen, the summit marked the 50th anniversary of formal diplomatic relations between the two sides and looked ahead to the next 50 years of cooperation. 　

Leaders from both sides pledged to manage differences through constructive dialogue and explore new areas for strategic collaboration and reiterated their shared responsibility in promoting global stability and upholding multilateralism. The summit produced a joint statement on climate change, reaffirming their commitment to the 2015 Paris Agreement and cooperation on climate-related issues. 　

But behind the handshakes and diplomatic formalities lie simmering tensions in multiple areas. These strains have dashed hopes of a major breakthrough in China-EU relations, which in recent years have been overshadowed by growing trade competition and divisions over geopolitical conflicts. 　

The EU was China’s largest trading partner from 2004 to 2019, and the second-largest since 2020 following Brexit. China has long been the EU’s second-largest trading partner, replacing the US between 2020 and 2022 as the top one. With a shared commitment to multilateralism in global governance and an absence of direct geopolitical competition, the China-EU comprehensive strategic partnership, built in 2003, has long been defined by close economic and trade cooperation.

Complimentary to Competitive

According to Jian Junbo, director of the Center for China-Europe Relations at Shanghai’s Fudan University, the biggest challenge is that China-EU trade ties are becoming increasingly competitive. The EU’s large trade deficit with China, exceeding 300 billion euros (US$351.1b) in 2024, has further strained relations. 　

“As China upgrades its industries and technology, and moves up the value chain, Chinese goods are becoming increasingly similar to European products, but often at more competitive prices, which puts mounting pressure on European manufacturers,” Jian told NewsChina. “As a result, the almost perfect complementarity that once defined China-EU trade relations is now giving way to direct competition.” 　

In 2019, the EU officially defined China as a cooperation partner, economic competitor and systemic rival, marking a major shift in the bloc’s approach. In 2021, Chinese Foreign Minister Wang Yi called this triple positioning “mutually contradictory and cancels itself out.” Wang, also a member of the Political Bureau of the Communist Party of China Central Committee, added that “China and Europe are partners, not competitors. China and Europe have neither serious conflicts of interest nor historical imbroglios.” 　

Nevertheless, since then the EU has increasingly viewed its economic and trade ties with China through a security lens. This approach has become a major factor disrupting bilateral relations.

“The EU has imposed stringent security reviews on Chinese investments in Europe, severely impacting Chinese investment in relevant fields,” Jian said. 　

“Uncertainty resulting from escalating trade and geopolitical tensions, concerns about China’s domestic economy and persistent producer price deflation weigh on the minds of both European and Chinese companies,” said Jens Eskelund, president of the European Union Chamber of Commerce in China, in the press release for the annual European Business in China Business Confidence Survey 2025 in May.

Earlier Rapprochement

However, following US President Donald Trump’s return to the White House in January, there appeared a chance for progress in China-EU bilateral ties. In a February speech to the EU’s diplomatic corps in Brussels, von der Leyen said there was room to deepen trade ties and even “find agreements” with China in “an era of hyper-competitive and hyper-transactional geopolitics.” 　

In March, EU Trade Commissioner Maros Sefcovic visited Beijing to discuss with Chinese leaders ways “to improve and rebalance China-EU trade and investment relations.” 　

After the Trump administration launched sweeping “Liberation Day” tariffs in early April, the EU furthered diplomatic outreach to China. In an April 8 phone call with Chinese Premier Li, von der Leyen stressed “the vital importance of stability and predictability for the global economy,” noting that Europe and China, as two of the world’s largest markets, share a responsibility to uphold a reformed global trading system. 　

In May, the European Parliament lifted its 2023 restrictions on meetings with Chinese officials, signaling a potential shift toward a more pragmatic approach. China responded by lifting sanctions, imposed in 2021, on several EU lawmakers in May. 　

Despite these intensified diplomatic exchanges, trade and economic relations seemed to have deteriorated rather than strengthened over the past months. 　

In March, the European Commission launched a foreign subsidy investigation into Chinese automaker BYD’s planned electric vehicle plant in Hungary, a significant escalation in trade tensions, particular in the EV sector. In October 2024, the EU had already imposed tariffs of up to 45 percent on Chinese EVs. Negotiations on China’s EV exports are ongoing. 　

At a Beijing forum in May, EU trade official Marjut Hannonen explicitly ruled out reviving the shelved Comprehensive Agreement on Investment (CAI) with China, saying there was “absolutely no intention” for the EU to resume talks. Negotiations on the agreement concluded in early 2020 after seven years, but the EU froze the approval process in 2021. Then, on June 6 this year, the European Commission announced new restrictions on Chinese medical device makers, limiting their access to public procurement markets.

Escalating Tensions

The US-led global tariff war has also been a major factor in EU’s stance toward China. With reduced Chinese access to the US market, the EU fears that Chinese exports originally destined for the US could be redirected to Europe, potentially disrupting local markets and putting additional pressure on European businesses. 　

For many officials and analysts, the EU appears to be using its relationship with China as leverage in negotiations with the US. “To resolve the tariff disputes with the US, the EU may, to some extent, use its economic and trade relations with China as a bargaining chip in negotiations with Washington, potentially posing a threat to China-EU trade ties,” Jian said. 　

This perception was reinforced when President von der Leyen substantially escalated her criticism of China on July 8, a day after the Trump administration sent letters to 14 countries threatening steep tariff hikes unless they made major concessions. In a statement made to the European Parliament in Strasbourg, France, von der Leyen laid out several conditions for advancing the China-EU partnership. 　

She called for a “genuine rebalancing” of bilateral ties, with “fewer market distortions, less overcapacity exported from China and fair, reciprocal access for European business in China.” Labeling China as a “decisive enabler” of Russia’s war against Ukraine, von der Leyen said the bloc “cannot accept” China’s “de facto enabling Russia’s war economy” and warned that the issue will be a “determining factor” for EU-China relations going forward. 　

China’s Foreign Ministry issued a strong response the following day. “China hopes the EU will realize that what needs rebalancing is its own mindset, not China-EU economic and trade relations,” Foreign Ministry spokesperson Mao Ning told reporters in Beijing on July 9. 　

Highlighting the EU’s own plan to “provide 1.44 trillion euros (US$1.7t) in subsidies from 2021 to 2030, with over 300 billion euros (US$351.1b) distributed by 2024” to various industries, Mao said: “The EU should not apply double standards.” Mao reiterated that China’s relations with Russia “do not target” any third party, and should not be interfered with. 　

Stressing that “China’s development creates opportunities, not challenges for the EU,” Mao urged Brussels to adopt a more “objective and rational perception” of China, and pursue a more “positive and pragmatic” China policy. 　

Following the exchange just ahead of the EU-China leaders’ summit later in the month, China-EU interactions took a noticeable downturn. The summit’s duration was shortened from two days to one at Beijing’s request, media reported. 　

On July 18, a week ahead of the summit, the EU imposed sanctions on two Chinese banks for their alleged role in supplying Russia. The move prompted China to lodge “solemn representations” with the EU’s trade chief in protest. During the summit, von der Leyen repeated her “rebalancing” message, while China held firm on its strategic positions, refusing to yield on key issues.

A vendor invites a girl to try a Romanian snack during the 8th Chengdu Europe Culture Season, Chengdu, Sichuan Province, April 12, 2025 (Photo by VCG)

A set of bamboo furniture is exhibited at the “50 Year of China-EU Relations: Building a Sustainable Future Together” forum, a high-level event to mark the 50th anniversary of China-EU diplomatic relations, held in Brussels, Belgium, July 15, 2025 (Photo by IC)

Lack of Autonomy

According to Sebastian Contin Trillo-Figueroa, an AsiaGlobal Fellow at the University of Hong Kong, China’s response to von der Leyen indicates it sees the EU as “unfit for serious negotiation.” 　

He attributed the stagnation in China-EU relations to the EU’s lack of “strategic imagination” and “political leadership” 　

“Europe expressed outrage but offered no recalibration,” Trillo-Figueroa wrote in an opinion piece for the South China Morning Post on July 30. He also argued that a major problem with EU’s approach to China is “moral selectivity.” For example, the EU has only singled out China for its ties with Russia while sidestepping other countries such as India, and that the EU itself paid Russia 23 billion euros (US$26.9b) for energy in 2024. 　

The EU’s double standards, TrilloFigueroa said, were laid bare when it caved to Trump’s tariff pressures. On July 27, just days after presenting her as a tough negotiator in Beijing, von der Leyen struck a deal with Trump in Scotland, allowing the US to impose 15 percent unilateral tariffs on most EU imports to the US, while pledging to invest US$600 billion in the US and dramatically increase purchases of US energy and military equipment. 　

While the tariff is lower than the 30 percent Trump threatened, the deal was widely criticized in Europe as capitulation to his “America First” agenda. It “marked Europe’s self-chosen descent from partner to client,” Trillo-Figueroa wrote, adding that “any pretense of ‘strategic autonomy’ disintegrated under these imposed dependencies.” 　

“In essence, Europe misreads Chinese strength as a threat and American coercion as a consequence of normal relations,” he said. “Compared to Europe, China stood up more defiantly to US economic pressure and emerged more resilient. Hence, Beijing sees little reason to engage with Brussels beyond protecting commercial ties,” Trillo-Figueroa wrote.

Two ‘Big Guys’

China has long voiced support for the EU’s pursuit of strategic autonomy. Despite the tense climate during the China-EU summit, Chinese President Xi Jinping reiterated this long-held position in meetings with EU leaders. 　

Calling China and the EU “big guys” in the international community, Xi said China-EU relations have reached a “critical juncture” and the two powers should “keep their bilateral relationship growing in the right direction.” 　

Saying there are “no fundamental conflicts of interest or geopolitical contradictions between China and the EU,” Xi proposed three principles for advancing China-EU relations: upholding mutual respect, upholding openness and cooperation to manage differences, and upholding multilateralism to safeguard international rules and order. 　

Xi said that China has always viewed its relations with Europe from a strategic, long-term perspective, regards Europe as an important pole in a multipolar world, and has consistently supported European integration and strategic autonomy. In turn, the EU should respect China’s core interests and major concerns, Xi said, adding that bilateral relations should not be subordinated to any third party. 　

Professor Jian Junbo argues that for relations to move forward, the two sides should use existing trade and economic dialogue mechanisms better to address disputes rather than politicized approaches. 　

“China and the EU should work together to oppose the large-scale protectionist measures introduced by the US government, which run against the tide of history, by pursuing greater openness of their own,” Jian said. 　

Others see climate cooperation as a promising path forward, as both sides still share strong political will in this area and have complimentary strengths. In an interview with State media agency CGTN, Wang Yiwei, director of the Center for European Studies at the Renmin University of China in Beijing, said there is “ample room” for collaboration in green industries between China and the EU, such as energy and transportation. 　

While China dominates manufacturing in renewable technologies such as solar panels and wind turbines, and leads in electric vehicle battery innovation, the EU has advantages in sustainable aviation fuels, carbon pricing mechanisms and regulatory expertise. “The complementary strengths of China and the EU in green industries provide a solid basis for expanding cooperation,” Wang said.

Spanish ham is displayed at the Yiwu International Commodities Fair, November 13, 2024 (Photo by VCG)

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