EU ministers vow to tackle 'China Shock 2.0' through talks with Beijing

EU Moves to Address 'China Shock 2.0' and Soaring Trade Deficit with China

EU Strategies and Dialogue to Tackle Trade Imbalance

Current State of EU-China Trade Relations

DUBLIN, Oct 23 (Reuters) - The European Union should strike deals with Beijing to curb imports in sectors such as chemicals, machinery and pharmaceuticals, EU ministers said on Friday, as the bloc faces an 'unsustainable' and damaging goods trade deficit with China.

European Trade Commissioner Maros Sefcovic earlier this month agreed with Beijing for the EU to cut imports of hybrid vehicles from China by more than half to address a deficit that has swelled to more than €1 billion ($1.12 billion) a day, and to support Europe's struggling carmakers.

Calls for Broader Sectoral Action

Irish Foreign Minister Helen McEntee told reporters dialogue with China could be a stepping stone "to look to more industries and sectors where we can address that imbalance."

China needs foreign buyers for the flood of relatively cheap state-subsidised goods its own shoppers can't absorb, and the EU is torn between welcoming those imports to ease living costs and keeping them out to rebuild its own factories.

Economic Impact and Industry Concerns

The EU's goods trade deficit swelled to more than €370 billion ($415.07 billion) in 2025 and is on course to break well past €400 billion this year, a situation European Commission President Ursula von der Leyen has called "unsustainable".

European industry says the export surge, dubbed China Shock 2.0, is already causing factory closures and job losses, most notably the 100,000 positions set to go at Volkswagen. 

China's Response and EU's Next Steps

China has said in the past it is not the root cause of the EU's problems, but a partner in solving them. 

European Commission President Ursula von der Leyen said this week there were growing concerns for chemicals and machinery. Lithuania Foreign Minister Kestutis Budrys said on Friday that pharmaceuticals could also be included.

Potential Measures and Ongoing Dialogue

Ministers did not go into potential short-term measures the EU could take in parallel to discussions with Beijing. 

Greece Deputy Foreign Minister Haris Theoharis said the EU had held talks with China for years without results, but these were now forthcoming.

"We should be continuing to engage in this process, and of course keep all the options open," he said before the meeting of trade ministers.

Unified EU Approach and Chinese Perspective

France's junior minister for trade, Nicolas Forissier, said dialogue was possible now that the EU was speaking as one.  

Chinese authorities "understand when you are clear, when you speak frankly, when you are firm on your positions," he said. 

Additional Information

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(Reporting by Philip Blenkinsop; editing by Alexandra Hudson)