A trade war serves nobody's interests

Editor's note: Feng Zhongping, a special commentator for CGTN, is currently the director of the Institute of European Studies at the Chinese Academy of Social Sciences and the director of the China-CEEC Institute (Budapest). His main research areas include European strategic issues, European integration, China-Europe relations, transatlantic relations, NATO, and China's foreign policy. The article reflects the author's opinions and not necessarily the views of CGTN.

Chinese Commerce Minister Wang Wentao met European Commissioner for Trade and Economic Security Maros Sefcovic and held the first meeting of the EU-China Trade and Investment Consultations (TIC) in Brussels on June 30. The encounter comes amid tension between China and the EU. The EU recently agreed to raise out-of-quota steel tariffs from 25 to 50 percent while cutting duty-free import volumes by nearly half – a measure set to take effect July 1. Beijing has opened consultations under the WTO framework, describing the measures as protectionist. Steel, in this sense, is less a cause than a symptom. It's the visible surface of frictions that have spread across the China-EU economic relationship over recent years.

Those frictions now span several fronts. On trade defense, the EU last year imposed additional countervailing duties on Chinese electric vehicles following a commission-initiated investigation. On market access, the Net-Zero Industry Act and related financing restrictions have introduced resilience and origin criteria into public procurement and project funding – creating additional pressure on suppliers with concentrated market positions. On regulatory reach, the Foreign Subsidies Regulation has extended scrutiny from goods to investment and corporate transactions, while a proposed revision of the EU's Cybersecurity Act would allow supplier origin to factor into security assessments alongside technical criteria. Taken together, these measures reflect a broader shift in how Brussels approaches economic interdependence with China.

Trade imbalance and supply chain security are currently the two major concerns of the European Union. According to EU statistics, the bloc's goods trade deficit with China reached 359.9 billion euros (about $410 billion) in 2025. This has become a major source of dissatisfaction for some EU member states regarding their relations with China. Of course, the situation varies across individual EU countries. Member states with deep trade relations with China, Germany foremost among them, have consistently called for a balanced and more cautious approach; the October 2024 vote on electric vehicle tariffs passed with 10 countries in favor, five against and 12 abstaining. At the industry level, the split is equally visible: European solar installers, renewable energy developers and downstream manufacturers have repeatedly pushed back against measures that raise their input costs, while it is primarily upstream producers seeking protection. In other words, the direction of the current policy reflects one side of an ongoing internal debate, not a settled European consensus.

European companies operating in China remain deeply committed to that market. The European Chamber of Commerce in China reported in May that only 7 percent of its member companies plan to shift procurement or manufacturing away from China. Nearly a third are deepening their local investment, and more than three-quarters say their China operations are more productive than elsewhere. But the dependence on China is not confined to those already there. European companies operating at home – solar project developers, battery storage operators, electric vehicle assemblers  – equally rely on China-made components, materials and equipment to keep their costs competitive and their deployment timelines on track.

That interdependence extends beyond the commercial. The EU needs Chinese cooperation on climate commitments, critical mineral supply and the multilateral frameworks that underpin global economic stability. China has a strong interest in a UN-centered and international law-based global order in which its concerns are addressed through dialogue rather than unilateral action. A deteriorating bilateral relationship would damage both parties and weaken the international architecture that neither can afford to lose, at a time when the trading system is already under pressure from multiple directions.

The economic and trade frictions between China and the EU will require sustained, serious negotiations. The Wang-Sefcovic meeting is a positive step, showing the world that the two sides are willing to strengthen dialogue with the view to stabilize and better balance the bilateral relationship.

(Cover: A view of the harbor in Hamburg, Germany, June 25, 2026. /VCG)