EU Trade Policy Shift Fuels China-EU Tensions, Despite Resilient Trade

The European Union's evolving trade policy, shifting from "de-risking" to measures more aligned with "decoupling," is causing concern about increased friction with China. Market observers and exporters note this shift, especially as the EU seeks closer alignment with the United States, potentially to avoid trans-Atlantic tensions.

This policy shift could lead to more trade remedy actions against Chinese products. Such actions could weaken the World Trade Organization and cast a shadow over the future of China-EU economic and trade cooperation.

Following the EU's recent inclusion of Chinese companies and financial institutions in sanctions against Russia, China's Ministry of Commerce stated it would take steps to protect the rights and interests of its businesses. China views this action as unilateral and lacking a basis in international law, particularly the accusations against its financial institutions.

This uncertainty is causing Chinese companies to re-evaluate their investment plans in Europe. Experts suggest that escalating trade tensions could ultimately harm the EU's interests, affecting job creation and hindering progress on its green transition agenda. They advocate for increased dialogue, mutual trust, and a renewed commitment to multilateralism to stabilize global trade and promote sustainable development.

The China Chamber of Commerce to the EU's automotive working group recently held meetings with EU officials in Brussels. These meetings marked the first formal engagement between the newly established working group and key EU institutions. The working group expressed concerns about the growing uncertainty arising from EU policy tools, such as the Foreign Subsidies Regulation and the EU framework for foreign direct investment screening.

Amid a complex global landscape, China-EU relations are at a new juncture. Despite policy concerns, bilateral trade remains resilient. Trade between the two grew in the first half of 2025, accounting for a significant portion of China's total foreign trade.

Businesses believe strong China-EU relations can reduce trade barriers and facilitate market access. One company, a manufacturer of portable air conditioners, saw increased exports to the European market during the first half of the year.