EU trade chief in talks with China to rebalance 'unsustainable' deficit

The European Union is expected to take a more assertive stance during negotiations with China starting Thursday, aiming to secure commitments from Beijing to rebalance their trade relationship.

European Trade Commissioner Maroš Šefčovič is in Beijing for a two-day meeting with Chinese Commerce Minister Wang Wentao. He said the first goal is to rebalance the EU's "unsustainable trade deficit" with China, which runs at ~€1B ($1.1B) per day.

"The message around the table was clear: the need to improve access to the Chinese market, while boosting our economic security," Šefčovič posted on X regarding the first day of talks.

On Tuesday, the European Parliament called for an EU-China trade policy that ensures economic reciprocity, a level playing field and a proportionate response if Beijing does not open its markets

China's industrial overcapacity, state subsidies and restrictions on European firms' access to the Chinese market have weighed on the EU economy.

To address these challenges, France and Germany this week proposed that the EU enact tougher measures against countries with unfair trade practices.

"We need a credible instrument in the hands of the Commission to allow for decisive and systemic reaction," French President Emmanuel Macron and German Chancellor Friedrich Merz wrote in a letter to European Commission President Ursula von der Leyen.

This could include the ability to immediately cut off a country's access to the EU's market, they added. The letter also suggested a measure to reduce economic overreliance on foreign countries.

In response, China's commerce ministry warned France and Germany not to encourage the EU to use protectionist tools. "They should avoid going down the wrong path in the wrong way, only to ultimately suffer the consequences themselves."