EU seeks to cut trade deficit with China in talks with Beijing

EU Targets Reduction of Trade Deficit with China Amid Critical Talks

Key Developments in EU-China Trade Relations

By Philip Blenkinsop

Upcoming High-Level Talks in Beijing

BRUSSELS, Oct 7 (Reuters) - European Trade Commissioner Maros Sefcovic heads to Beijing on Wednesday for key talks designed to reduce the European Union's growing trade deficit with China, which threatens to destroy EU industry and many thousands of jobs.

Sefcovic will meet Chinese Commerce Minister Wang Wentao on Thursday and Friday after three months of discussions over the EU's goods trade deficit of more than €1 billion ($1.12 billion) a day and Chinese curbs on exports of rare earths and other critical minerals.

Objectives and Expectations

The European trade official has said he wants "tangible results" by October and some form of commitment that can be put to EU leaders meeting in Brussels on October 15-16. How to handle trade relations with China is top of the summit's agenda.

EU's Strategic Approach to Trade Imbalance

Statements from EU Leadership

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

International and Chinese Perspectives

G20 finance leaders, except China's, agreed in September to act against "non-market" distortions that exacerbate imbalances. Beijing says that hyping up issues such as economic imbalances and overcapacities is a form of protectionism that is designed to exert pressure on and restrict China.

Measures and Concerns Over Imports

Proposed Actions by the European Commission

EU trade officials want China to implement measures to open up its market more to EU companies, but say this move alone will not be enough. The Commission is pushing for China to set a cap on some of its exports.

Rising Imports and Sectoral Impact

The Commission's chief trade enforcement officer said last week that nearly a quarter of all imports were rising at a worrying rate, with abnormal increases for machinery, textiles, basic metals and chemicals.

It is unclear which imports China might agree to curb.

Concerns Over Automotive Imports

EU officials are particularly concerned by the sharp rise in car imports from China. Imports of plug-in hybrids into the EU have increased 86% in the year to September, with a 20% decline in prices, while imports of battery electric vehicles (BEVs) have risen 40%. More than half of all these vehicles are from China despite EU tariffs on imports of BEVs built there.

($1 = 0.8935 euros)

(Reporting by Philip Blenkinsop; Editing by Paul Simao)