Beijing warns of retaliation if Europe imposes restrictions on Chinese companies

BEIJING — China’s Commerce Ministry has sent a strong warning to the European Union ahead of high-level talks scheduled in Beijing next week.

China “will respond firmly” if the EU introduces restrictions on Chinese companies or products, China’s Ministry of Commerce said in a statement on Tuesday, according to a translation from CNBC’s Mandarin.

The ministry said such actions, while China and the EU are engaged in trade negotiations, would “seriously undermine mutual trust” and “disrupt” the negotiations.

China and the EU began trade talks this summer, with Europe aiming to reduce its record trade deficit with China by October. European Trade Commissioner Maroš Šefčovič warned in an interview with Euronews this week that Beijing must provide “concrete results” by October or face “tougher measures”. He is expected to travel to Beijing next week.

Earlier this week, Rhodium Group’s Noah Barkin said Europe was considering steps to exclude China from the bloc.

Citing European officials, he said Germany and France were finalizing a joint document calling on the European Commission to accelerate the development of a tool that one official described as allowing Brussels to “cut China off from the European market within 24 hours.”

Barkin said the measures could mirror the U.S. Section 301 tariff approach. The Chinese Commerce Ministry statement said it responded to Europe’s thinking on “301”-style tools.

While the Association of Southeast Asian Nations overtook the EU in 2020 to become China’s largest merchandise trading partner, the EU’s trade deficit with China is the largest in the world, recently surpassing that of the United States. This is according to Chinese customs data accessible via Wind Information.

Including services, the EU said it was China’s largest trading partner, with a combined trade of 880 billion euros, or nearly $1 trillion, last year.