EU-China trade talks begin in Beijing amid growing pressure | News from the European Union

Discussions will focus on the billion-euro daily deficit and restrictions on the export of rare earths.

European Trade Commissioner Maros Sefcovic has arrived in Beijing for talks on the European Union’s (EU) growing trade deficit with China.

Sefcovic will meet Chinese Commerce Minister Wang Wentao on Thursday and Friday after months of discussions over the EU’s trade deficit of more than 1 billion euros ($1.12 billion) a day, as well as Chinese restrictions on exports of rare earths and other essential minerals.

Meanwhile, Chinese companies are increasingly competing with Europe’s biggest auto brands. China has rejected the EU’s request to voluntarily limit Chinese exports of hybrid cars as the two sides begin negotiations, the Financial Times reported on Wednesday. The European Commission now hopes to get Beijing to agree to a unilateral EU measure to cap imports of hybrids, the outlet said, citing two diplomats briefed on the plan.

These two days of discussions come as a majority of European lawmakers called on Wednesday for a more assertive trade policy towards Beijing in a non-binding resolution. China has pledged to provide a “resolute response” to protect its industries if the European Union imposes restrictions on Chinese companies or products, according to its Commerce Ministry.

Germany and France propose rapid EU measure

French President Emmanuel Macron and German Chancellor Friedrich Merz, leaders of the bloc’s two biggest powers, urged the EU on Tuesday to prepare a “credible instrument” that could be quickly activated to hit back at countries that are economically harming the bloc.

The new measure would not target any particular country. German officials have said the EU needs a tool as powerful as the Section 301 tariffs imposed by the United States or China’s restrictions on exports of critical minerals.

The proposed weapon – which will be discussed at next week’s summit of EU leaders – would give the European Commission the power to respond to trade aggression within days.

China responded to the letter by urging Paris and Berlin to avoid “protectionist” measures.

“We hope that France and Germany, as major global economies, will maintain openness, cooperation and free trade,” the Commerce Ministry said in a statement.

“They should avoid going down the wrong path, only to suffer the consequences themselves.”

G20 financial leaders, excluding China, agreed in September to act against “non-market” distortions that exacerbate imbalances. Beijing says exaggerating problems such as economic imbalances and overcapacity is a form of protectionism aimed at pressuring and restraining China.

Commercial negotiations in progress

European and Chinese officials have been discussing trade imbalances since June. Sefcovic said he wanted “tangible results by October” as well as some form of commitment that could be presented at the EU leaders’ meeting in Brussels.

Trade relations with China will top the agenda at next week’s summit, as soaring debt prompted auditors to warn of the EU’s next seven-year budget and sparked protests in France.

European Commission President Ursula von der Leyen told the European Parliament last month that the trade imbalance had reached a critical point and that Europe would use all tools at its disposal to rebalance the relationship.