Chinese experts say EU misreads trade ties by focusing on trade deficits

Chinese experts and officials are urging the European Union to take a broader view of economic ties with China, arguing that its focus on bilateral goods deficits reflects concerns about Europe's competitiveness and risks encouraging protectionist policy responses.

The comments come after EU leaders at a June summit called for continued engagement with China while strengthening the bloc's trade defense tools. The tougher stance has centered on concerns over "trade imbalances," a characterization China says oversimplifies a highly integrated economic relationship.

Foreign Ministry spokesperson Mao Ning said China does not deliberately seek a trade surplus with the EU and described bilateral commerce as driven by market forces.

If countries only look at goods trade while disregarding services trade and investment income, fixate on headline trade figures without analyzing trade composition and where profits accrue, and harp on imports from China while turning a blind eye to their own export curbs, they will inevitably draw the one-sided conclusion that trade is "unbalanced," Mao said.

She warned that "de-risking" or "dependence reduction" policies could raise costs for European industry and weaken competitiveness.

Sun Yanhong, director of the European Economic Studies Department at the Institute of European Studies of the Chinese Academy of Social Sciences, said the EU's tougher trade stance reflects weaker internal growth and slow structural reform, and that unresolved issues in the EU single market have made external partners, including China, an easier target for domestic economic concerns.

Criticism of Chinese "overcapacity" overlooks the gains from China's industrial growth, she said, adding that China's demand for European machinery and consumer goods has increased, supporting exports and industrial output in Europe's major economies.

China-EU trade is deeply embedded in global supply chains, Sun noted. Nearly half of bilateral trade consists of intermediate goods used in production. A significant share of European firms' output in China is exported back to Europe and other markets, while foreign-invested firms in China also ship large volumes to Europe.

Despite tensions, European investment in China continues to grow. In 2025, German investment rose more than 55%, while Swiss and British investment increased by 66.8% and 93%, respectively.

In the meantime, bilateral cooperation is expanding in green and digital industries, a development Sun said is rapidly unlocking innovative potential. In the decade prior to 2022, Chinese and European firms jointly filed more than 12,000 patents in areas such as digital technologies, communications equipment and clean energy, while European automakers have been deepening partnerships with Chinese companies to make electric vehicles.

Zhang Jian, vice president of China Institutes of Contemporary International Relations, said European concerns about trade deficits and currency levels reflect competitiveness anxieties rather than a structural trade imbalance.

Goods trade alone is insufficient to judge balance, Zhang said, adding that the EU ran a services surplus with China of more than $50 billion in 2024, including over $10 billion in intellectual property royalties. He also noted that exports account for about a quarter of the EU's GDP, compared with around 19% in China.

China-EU economic and trade relations are rooted in complementary strengths and mutual benefit, Zhang said. "The EU should seize opportunities arising from China's development and foster a fair, non-discriminatory, transparent and predictable market environment for Chinese firms."

"Enhanced dialogue and deeper trade and economic ties serve the shared interests of China and the EU, and align with the widespread expectations of businesses and the public from both sides," he added.