The EU’s China problem exploded – Now we are trying to find common ground

The year 2025 will go down in history when, for the first time, all EU member states had a trade deficit with China. The entire Union’s trade balance deficit rose to a record 360 billion euros. The China problem has also struck the minds of EU leaders. That’s why they are trying to find common ground on the China line at the summit starting Thursday evening.

The sensitivity of the China problem is illustrated by the fact that the draft statement of the meeting seen by Kauppalehti does not even mention China by name; it is only stated that the strategic discussion is about “global macroeconomic imbalances”.

“It is not always appropriate to record everything in the conclusions”, one diplomatic source justifies the roundabout expression used in the statement.

At the heart of the China problem is the country’s production model, where strong government subsidies enable massive overcapacity and the export of cheap products to Europe. This can be seen concretely in the fact that the European car, steel and chemical industries, as well as the forest industry, are under great pressure, and there is a justified fear of the loss of jobs and industries in Europe.

Commission line

The EU Commission pursues a line that does not aim at a total disconnection from China, but aims at reducing the risks. This means strengthening domestic production capacity and diversifying supply chains through free trade agreements, as well as stronger market protection from unfair competition.

The Commission also wants “sharper tools” at its disposal, such as the EU Trade Commissioner Maroš Šefčovič stated on Monday. It means more effective tools to deal with dumping, state subsidies and large-scale market distortions. A new tool targeting excess capacity has also been on display.

In order to move forward with the actions, the Commission needs the united support of the member countries behind it. “We need more action and less talk,” described one diplomatic source.

However, finding a common line is not easy, because the member countries’ interests in China differ. In the past, for example, Germany and Hungary opposed tariffs on Chinese electric cars, while France, Italy and the Netherlands supported them.

However, now the views on stricter trade protection measures are converging. In particular, France, Italy, the Netherlands, Poland, Lithuania and Belgium have demanded faster and more decisive actions. It is also significant that the attitude in Germany is changing, like the chancellor Friedrich Merz last week your line. Germany’s change of attitude has been accelerated by the country’s gigantic trade deficit with China, which was 90 billion euros last year. The change in attitude is also fueled by the accelerating loss of jobs.

At the same time, however, the fear of China’s countermeasures lives on: many European companies depend on Chinese components and raw materials, and China’s possible export restrictions could hurt badly. This also explains why solving the China problem will not be easy.

Orphan’s claim

The prime minister representing Finland at the two-day summit Petteri Orpo (kok) told Kauppalehti on Thursday that he intends to make a proposal at the summit, according to which the commission must draw up a road map on how to reduce strategic dependencies on China. According to Orpo, the problem is that different sectors related to China, such as critical minerals, have so far been examined separately.

“All these different sectors need to be connected,” says Orpo.

According to Orpo, it is understandable that each member state manages its own relationship with China, but in addition to that, the EU must have a common China policy.

The Prime Minister has a clear goal for the summit that starts on Thursday evening.

“A common China policy must be found.”

In addition to the China challenges, the leaders of EU countries will discuss, among other things, strengthening the Union’s competitiveness and reforming the internal market. In addition, the Union’s multi-year financial framework, Ukraine and the situation in the Middle East will be discussed.