European Union Launches High-Level Consultations to Counter China’s Growing Influence

June 30, Kathmandu – In a move to control growing trade imbalances, the European Union (EU) and China have launched a new high-level ministerial mechanism aimed at resolving outstanding issues. Following intense talks in Brussels, both sides jointly issued a rare statement.

This marks the first joint statement since 2019. The talks involved EU Trade Commissioner Maroš Šefčovič and China’s Commerce Minister Wang Wentao, engaging in lengthy discussions.

Both parties agreed to establish a “Trade and Investment Consultation Mechanism.” Brussels has set a firm deadline for substantial progress on trade imbalance, export controls, and intellectual property disputes by October.

The trade imbalance between the EU and China is deeply concerning. In 2025, the EU’s trade deficit with China reached 360 billion euros and continues to grow.

According to the EU’s statistics agency Eurostat, data published on June 15 reveals that China’s daily exports to the EU exceed those from the EU to China by approximately 1 billion euros. The trade deficit with China increased by 15% in May alone.

Germany, in particular, has seen its trade deficit rise by 31.6%. If this trend continues, the daily trade deficit with China could surpass 1 billion euros, setting a new record in 2025.

Impact of the ‘China Shock’ in Europe

Most European countries are currently feeling the effects of the ‘China Shock.’ Chinese companies’ low-priced competition poses a significant challenge to Europe’s industrial backbone. EU leaders have dubbed this phenomenon ‘China Shock 2.0’ just two weeks ago. This impact extends beyond electric vehicles and green energy to a wider scope.

Due to China’s excessive exports, Europe’s manufacturing sector, including automobile, chemical, and machinery industries, is under pressure. In April, Chinese brand vehicles comprised approximately one in every ten cars sold in Europe—a figure that has doubled compared to the previous year.

Volkswagen, Europe’s largest automaker, has announced plans to close four plants and cut up to 100,000 jobs in Germany due to declining profits influenced by Chinese competition and the costs of electric vehicle development.

Industry groups such as the European Chamber of Commerce in China warn that the flood of Chinese imports places many EU factories at risk. Economists attribute this surge to strong government subsidies in China, which have increased production and led to an overflow of Chinese goods in Europe.

Monitoring Mechanism and Working Groups

Following the Brussels talks, both sides have established four initial working groups focused on trade balance, export controls, intellectual property rights, and WTO reforms. The first group is tasked with developing a monitoring mechanism for trade flows.

This mechanism will monitor excessive import growth based on unified trade data beyond those provided individually by each party. If imports enter the ‘yellow’ or ‘red’ zones indicating elevated concerns, discussions will be initiated immediately at the political level.

Šefčovič emphasized that creating a shared data framework is the mechanism’s primary objective. Expected outcomes and action plans will be developed soon, with the first assessment scheduled for September.

October Deadline and Caution

Šefčovič described the talks as “intense, focused, and constructive.” He warned that if meaningful progress is not achieved by October, the EU will need to take immediate measures. “The Chinese side is beginning to better understand the challenges Europe faces. We must safeguard our industrial base and ensure fair competition,” he said.

Chinese Minister Wang reassured that export controls will not affect rare minerals and permanent magnets, a commitment welcomed by Šefčovič. However, some Chinese circles remain cautious about the EU’s measures against the ‘China Shock.’

Chinese state-affiliated media outlet CCTV’s microsite YuYuanTanTian claimed that although trade with Europe may be disrupted, Beijing is capable of managing the situation smoothly.

Future Strategies

According to Politico, the European Commission is adopting a dual approach toward China. First, strengthening trade defense systems by prioritizing domestic businesses and proposing to exclude Chinese tech companies such as Huawei from networks.

Second, through a “diversification tool,” European companies will be required to reduce dependence on China by having at least three suppliers, as well as activating “anti-economic coercion tools.” However, internal disagreements among member states and legal complexities mean the effectiveness of these measures will depend on the October results.