Markets 
Published on •Updated
The European Union is heading into a “phase of conflict” with Beijing unless it reaches a deal by the autumn to curb its widening trade deficit, European People’s Party chairman Manfred Weber has told Euronews’ flagship morning programme, Europe Today.
The EU’s trade chief, Maroš Šefčovič, said on Monday that Brussels aims to reach an agreement with China by October to address trade imbalances, amid growing concern that Chinese industrial overcapacity is undercutting Europe’s already struggling industries. Brussels is calling for tangible results as it readies new defence tools.
“We have to fundamentally change of our approach to China,” he told Euronews. “We need a new level playing field where we clarify that subsidies cannot be part of a free market economy.”
Europe is increasingly worried about a “China shock 2.0”, with fears that Beijing’s industrial overcapacity—from cheap consumer goods to electric vehicles —will undercut European manufacturers and threaten jobs through unfair competition.
“The Chinese must understand this (…) we cannot allow this,” Weber said.
Asked what would happen if trade imbalances were not addressed by October, the European conservatives’ leader told Euronews the EU would enter a “phase of conflict” with China.
Weber leads the powerful European People’s Party group in the European Parliament and is a member of Germany’s CDU, the same party as Commission President Ursula von der Leyen and Chancellor Friedrich Merz.
October deadline to fix ‘unsustainable’ deficit
The EU is walking a fine line between avoiding a trade war and adopting a more defensive trade policy to ensure European companies can compete fairly.
To better shield the European single market, EU leaders have asked Commission President Ursula von der Leyen to review the bloc’s trade defence instruments and consider new ones. At their summit in May, however, leaders stopped short of naming China, reflecting divisions over how the bloc should manage its relationship with Beijing.
While Spanish Prime Minister Pedro Sánchez has argued that China should be seen as a partner and has made several visits to Beijing over the past two years, France is pushing for a stronger “European preference” across strategic industries.
Germany, the EU’s largest economy and its largest industrial hub, is widely seen as the pivotal country in determining how far the bloc is willing to harden its stance towards Beijing.
Among the measures under discussion is a “diversification mechanism” aimed at encouraging EU businesses to reduce their reliance on Chinese suppliers.
The Commission is also weighing a “solidarity mechanism” to support member states and industries hardest hit by Chinese competition, or those that could face Chinese retaliation.
For European leaders, October could prove a pivotal moment.
It could mark the start of a long-awaited rebalancing after years of frustration over China’s failure to address what the EU sees as an unsustainable trade deficit — or another delay in countermeasures, which Beijing could interpret as a sign of weakness.
Read the full article here
