Trade tensions between the EU and China escalated in March, when the Commission proposed its Industrial Accelerator Act, and have been simmering since then, but October is decisive.
The second ministerial round of the EU–China Trade and Investment Consultations takes place this week. EU Trade Commissioner Maroš Šefčovič is meeting his counterpart, Commerce Minister Wang Wentao, in Beijing this Thursday-Friday, but nobody is holding their breath for a quick resolution. The next date to watch is 15–16 October, when EU leaders meet at the European Council in Brussels to discuss their response.
Some sort of escalation is likely—not a full-blown trade war, but an intensification of the same tit-for-tat measures and countermeasures we’ve seen to date, punctuated by negotiations.
That is, at least, the expectation of many Chinese analysts that we have been reading.
We’ve been working on a paper in cooperation with the Friedrich-Ebert-Stiftung, analysing Chinese perspectives on EU-China trade tensions. The paper, which draws on a large corpus of Chinese-language texts published between October 2022 and September 2026 will be published shortly through FES’s online library, but given that Šefčovič is in Beijing on Thursday, we wanted to provide subscribers with a preview.
What follows is an abridged version of the much longer full paper.
Key Points
Chinese analysts seldom regard the EU as a capable geopolitical actor. EU fragmentation and disunity are consistently highlighted in the corpus and the standing recommendation is engagement with member-state capitals rather than Brussels.
Analysts broadly follow the semi-official narrative that the US is a principal driver of Europe’s tough line on China. However, an emerging strand of analysis treats the hard line as Europe’s own.
Authors reject the view that subsidy and dumping explain the surplus, but they more readily acknowledge that domestic demand is too weak to absorb capacity, which then spills abroad.
The dominant diagnosis is that Europe’s anxiety is real but misattributed, but macroeconomists in particular are more willing to acknowledge a domestic imbalance and to link overcapacity to trade friction.
The prevailing expectation in the corpus is for protracted, institutionalised friction. The observation that there is still room for negotiations is recurrent and the dominant call is for “strategic composure”.
Analysts are more concerned about the wider external frictions created by China’s trade surplus than about tensions with the EU per se.
The EU can expect a firm but non-escalatory response to any trade defence measures introduced this year. The dominant prescription is to gradually expand imports rather than restrict exports.
Localisation, or further Chinese manufacturing investment in Europe, is the most widely supported solution to trade frictions, but there are detractors—technology transfer and investment terms will be a key battleground.
Implications for the EU:
Prioritise member state unity; make sure to match rhetoric with action; expect firm but measured resistance; treat the surplus as a global problem; and follow China’s domestic economic debate closely.
Avoid resting arguments on subsidies and frame trade effects in terms of Europe’s social stability; ask for measures Beijing can present as its own policy; and define the boundaries of de-risking.
HOW BEIJING READS EUROPE: CHINESE PERSPECTIVES ON THE EU–CHINA TRADE CONFLICT
Jacob Mardell
An abridged version of a forthcoming Sinification paper produced in cooperation with the Friedrich-Ebert-Stiftung. The full paper will shortly be available through the FES online library.
I. Chinese Perspectives on EU–China Relations
Chinese analysts seldom regard the EU as a capable geopolitical actor. This assessment is broadly shared by authors in the corpus, who are sceptical about EU unity and European staying power in a trade conflict. The establishment consensus reading of Europe is—to borrow a phrase from Sun Keqin (孙恪勤), a researcher at CICIR—that it is a “declining aristocrat”.
EU fragmentation and disunity are consistently highlighted in the corpus and the standing recommendation is engagement with member-state capitals rather than Brussels. There are, however, a few who see EU institutions as increasingly important actors. Zhang Jian (张健), for example, argues that, as the Franco-German axis weakens, the Commission is filling the vacuum.
The perception of EU weakness—in both its general standing and its cohesion—is matched by confidence in China’s current position. With Chinese analysts reading the Xi–Trump summit in May as a truce with the US, some consider Europe’s position diminished. The perception that China prevailed in the 2025 US–China trade war also leads several analysts to conclude that a conflict with a less powerful actor such as the EU would be comparatively manageable.
The corpus broadly follows the semi-official narrative that the US is a principal driver of Europe’s tough line on China. However, since late 2025, and more clearly since the May 2026 summit, an emerging strand of analysis, mostly from Europe specialists, treats the hard line as Europe’s own. Yan Shaohua (严少华) expects EU China policy to be “driven more by its own internal dynamics” and Xin Hua (忻华) notes that Europe “originated” (首创) de-risking.
Authors who address the transatlantic question have long argued for differentiated treatment of the US and Europe. It may seem self-evident to Europeans that Europe and the US should be approached differently, but it speaks volumes that this point must be made, and the opposite argument—that Europe answers to the US and so China should focus on Washington—is also made several times.
On the future prospects of the transatlantic relationship, authors disagree on whether 2026 represents rupture or continuity, but the most common reading is that the transatlantic relationship will persist in diminished form, sustained by Europe’s structural dependence on the US in security and other areas.
The corpus also provides a less positive interpretation than the semi-official line on what “strategic autonomy” means for China. Even Jian Junbo, who has consistently argued that Beijing should support European strategic autonomy, wrote in January 2023 that it “carries a strong undertone of targeting China” and called it a “double-edged sword”.
Most authors agree that, whatever strategic autonomy might mean for China, it remains largely aspirational. Li Xing (李形) calls it “a myth constructed through political discourse”, and Jian Junbo, writing of the EU’s vow to pursue geopolitical competition, writes that “the slogans are too loud and the actual steps too small”.
On the prognosis for China–EU relations, analysts tend to repeat the official line that China and Europe have no fundamental conflict of interest and no “geopolitical contradiction”, but several senior Europe specialists have begun to qualify it.
Observing a fundamental shift in relations in recent years is a more common position than repetition of the official line might suggest. In fact, several of the most prominent Europe specialists now state that trade relations have shifted from vertical complementarity to horizontal competition.
Several authors take a pessimistic position on EU–China relations as a whole. Jin Canrong endorses the view that EU–China relations face a “tipping point” similar to that in US–China relations a decade ago, and judges that “the overall trend has turned negative”.
II. Chinese Views on Overcapacity and the Trade Surplus
On China’s trade surplus and the overcapacity issue itself, Beijing has been vocal in its official denial of the charge. The consensus evident in the corpus broadly follows this party line, though in less categorical terms and with some variation. Authors reject the view that subsidies and dumping explain the surplus, but they more readily acknowledge that domestic demand is too weak to absorb capacity, which then spills abroad.
The Chinese Europe experts in the corpus broadly reiterate the sanctioned narrative on the drivers of the “China shock 2.0” narrative in Europe, arguing that the EU’s movement towards “protectionism” stems from anxiety about self-inflicted industrial decline and that confronting China will only compound the problem. They tend to describe Europe’s concerns as legitimate, but do not concede the European account of their causes. The dominant diagnosis is that Europe’s anxiety is real but misattributed—Jiang Feng (姜锋), for example, calls the EU’s hard line “in essence the external projection of its internal crisis”.
Some authors describe Europe’s responses as emotional and irrational, while others trace this transferred trauma to European dependence on Russia.
Among the Europe experts more receptive to European concerns, Ding Chun writes that Europe’s concern about the deficit “is not in itself too unreasonable, and is easy to understand” and that China should “take the European side’s genuine concerns seriously”.
Macroeconomists in particular are more willing to acknowledge a domestic imbalance and to link overcapacity to trade friction. This may in part be because it is more politically permissible for Chinese economists to raise concerns about the negative externalities of observed domestic phenomena than it is to start from foreign complaints and follow them to their conclusions about the Chinese system. Among them, Huang Yiping (黄益平) most clearly treats “China Shock 2.0” as a serious proposition. Yao Yang (姚洋) also accepts the phenomenon, rejecting only the mechanism.
These acknowledgements are the most direct in the corpus and come from senior figures, but they are largely macroeconomic and begin from a domestic starting point, with trade friction named as a consequence. They do not accept the argument on subsidies and—of potential relevance to European policymakers—their arguments are intertwined with concern about the domestic, as well as the external, implications of China’s export-driven model.
The prevailing expectation among experts is for protracted, institutionalised friction. Despite confidence in China’s position, few authors predict that the EU will concede easily, or appear to expect a full-scale trade war. The central prediction is for intermittent bargaining leading to a negotiated settlement, and authors point to a precedent in the EV case.
Ding Chun’s prediction sums up the consensus—he expects that the EU will be “tough in rhetoric, escalatory in instruments, but leaving room in implementation”.
This is not to say that authors expect a return to the status quo ante. For example, Ding Chun also expects the dispute to migrate “from friction over single products to friction between industrial systems”.
While analysts are relatively confident that a full-scale trade war with Europe can be avoided, there is greater concern about the external frictions created by China’s trade surplus more broadly—particularly with countries in the Global South.
This contrast is most clearly evidenced by results of the annual survey conducted by the Center for International Security and Strategy at Tsinghua, which asks Chinese experts to assess the principal geopolitical risks facing China. In most years, US-related concerns occupy first place, while Europe registers at or near the bottom—seventh of eight in 2024 and last in 2025. In 2026, the item devoted to the US—technology decoupling and “systematic encirclement”—fell to third place, behind the Taiwan Strait and China–Japan relations, although the US is listed as a core party to both. The “securitisation” of EU–China economic relations, under the heading “crossing the tipping point” (跨过临界点), ranked seventh of ten, with April’s Hungarian election flagged as the turning point. At fifth place, the middle position, was international backlash over a second “China shock” and the concern that a “wolf-pack effect” around Chinese overcapacity would galvanise a unified international position on Chinese trade and overcapacity. The concern is not about Europe per se, but about a global backlash, although Europe was identified as its potential leader.
III. Policy Recommendations
Although the baseline sentiment throughout the corpus is that, with Europe relatively weak, China holding retaliatory options and the US–China relationship stabilised, China is in a strong position, few authors argue that Beijing should press its advantage.
The corpus, on balance, is considerably less hawkish than Chinese debates tend to be when the adversary is the US, let alone when the focus turns to Japan. The observation that there is still room for negotiations is recurrent and the dominant call is for “strategic composure”.
Explicit hawkishness is a minority position and is concentrated largely outside the Europe-specialist community, particularly among public and media commentators. Arguments against a hard line are more extensively developed, and restraint is the dominant prescription.
Huang Jing (黄靖) summarises China’s formula with the phrase “the keynote of our relations with Europe is not struggle but compromise and cooperation: if you insist on fighting, we will fight you. When the fighting is done, so long as you are willing to extend a hand, we remain willing to shake it”.
Where retaliation is advocated, authors call for trade measures of the sort seen in response to the 2024 EV tariffs. However, in 2026 authors increasingly treat export controls on rare earths and other critical inputs as China’s strongest card.
Authors also refer to the legal toolkit China has developed over the years to strengthen its defensive and offensive capabilities vis-à-vis foreign pressure. Authors pair legal defence with a call for China to shape the rules itself. Ma Xiaolin (马晓霖) and Wang Wanying (王婉赢) for example, write that “passively adapting to the other side’s rule framework is clearly not advisable”, and that active participation in rule dialogue is the route to “converting rule pressure into institutional competitiveness”.
Discussion of stimulating domestic demand features prominently in the corpus, with a number of authors portraying rebalancing as necessary not only from a domestic standpoint, but also in order to improve China’s external relations. However, the debate on rebalancing is long-standing—despite growing calls from economists to boost domestic demand, and despite Beijing’s stated support for the same objective, its policy planning continues to prioritise manufacturing and export-driven growth.
Few authors call for restricting exports directly, and several rule it out. Xu Mingqi (徐明棋), for instance, states that “restricting exports is not feasible”. However, the rejection of export curbs is less firm than it first appears. For example, further cutting export tax rebates is on the table—Zhang Deli (张德礼) calls cutting or abolishing them “the government’s relatively direct and effective means of adjusting export prices”.
In general, “balancing upward”, or expanding the export of European services, agri-food and high value-added consumer goods is widely supported.
The domestic reform debate also discusses gradual RMB appreciation as a solution. Support for appreciation is gradually growing among Chinese economists, who argue that China’s currency has room to appreciate and that appreciation could advance RMB internationalisation while tempering trade friction. However, no author advocates an overnight revaluation, and the Plaza Accord is cited mainly as a cautionary example.
Localisation, or further Chinese manufacturing investment in Europe, is the most widely supported solution to trade frictions, the logic being that the local value and jobs created would allay European concerns about industrial decline. This argument resonates with a broader discussion beyond the corpus. The case for a new wave of Chinese overseas investment is gaining support in both discourse and policy, with an increasing number of establishment intellectuals calling for a “Going Out 2.0” in order to build a “new China” abroad.
However, this idea also has its detractors. Luo Zhiheng (罗志恒) for example calls for safeguards against an overly rapid transfer of capacity “hollowing out the domestic industrial chain”.
IV. Implications for the EU
Prioritise member-state unity. Long-standing advocacy of a differentiated approach to EU member states and constituent interests has become more explicit as trade tensions rise. Brussels is already keenly aware that disagreement among member states is a structural weakness and that warnings about Beijing’s “divide and rule” approach are long-standing, but it should continue to stress the importance of a united approach, underlining that Beijing’s strategy depends on being able to play interest groups off against one another.
Match rhetoric with action. Chinese analysts generally hold the view that Brussels’ rhetoric on China outpaces its ability to act and they tend to attach limited weight to European power and to the EU as a geopolitical actor. The power Chinese analysts take most seriously is regulatory and market power, and they read unused instruments, such as the Anti-Coercion Instrument, as lacking credibility. Despite Beijing’s objections, the more the EU develops and applies its de-risking and trade defence instruments, the more Chinese analysis is likely to treat it as a significant actor.
Expect firm but measured resistance. Despite considerable confidence in China’s relative strength, analysts generally do not argue for exploiting that advantage aggressively. The debate is not hawkish: the dominant counsel is for restraint and calibrated retaliation, with an expectation of manageable conflict running alongside negotiations. This may reflect confidence in a Chinese victory—a view that there is no need for urgent action—but it may also stem from recognition of Europe’s economic significance to China, combined with reluctance to risk further disruption, given the state of China’s domestic economy and wider global instability. The corpus of expert views tentatively supports the latter reading. Additionally, China’s economy faces significant headwinds, and second, that Beijing has other pressing concerns—in the Middle East, with Japan and across the Taiwan Strait—and has little reason to escalate a confrontation with its second-largest trading partner.
Treat the surplus as a global problem. Chinese analysts are less concerned about Europe itself than about the wider international consequences of China’s trade surplus and the EU’s potential to galvanise a broader front of resistance. The EU should not view trade tensions with China as an isolated, bilateral phenomenon, but as a part of a wider renegotiation of China’s role in global trade. Brussels should coordinate as much as possible with other countries, particularly in the Global South.
Follow the domestic economic debate. Chinese macroeconomists write more openly about China’s trade surplus than Chinese Europe experts do. This indicates that the imbalance is acknowledged more widely within the Chinese establishment than extensive rebuttals in the official discourse and by Chinese Europe experts would imply.
Speak Beijing’s language on “subsidies” and “overcapacity”. While some concede the overcapacity charge, analysts almost universally reject the idea that overcapacity is mostly a subsidy-induced phenomenon. This is the official line, but it also appears to reflect a genuine view that Europe underestimates the competitiveness of Chinese industry. Chinese analysts accept the premise that European industry is under pressure, and arguments framed in terms of social stability are familiar to Beijing.
Ask for what Beijing can present as its own policy. Few Chinese analysts call for direct export restrictions, and several rule them out, but in practice, Beijing has already licensed exports of battery-electric cars, cut export tax rebates and negotiated minimum prices for electric vehicles—and presents these as its own decisions rather than as concessions.
Define the boundary of de-risking. The most persistent Chinese complaint about “de-risking” is that it is open-ended. This also creates leverage: Brussels can offer greater predictability in exchange for Chinese commitments rather than conceding it unilaterally.
Technology transfer and investment terms are likely to be a key battlefield. Localisation is the most widely supported Chinese response to trade tensions and investment in European production is likely to be a central part of Beijing’s offer. There is, however, a tension between growing concern about technology transfer and industrial hollowing-out on the Chinese side, and demands for technology transfer and local value added on the European side.
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