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

European Union ministers pledged on Friday to address the escalating "China Shock 2.0" by engaging in talks with Beijing, as the bloc confronts a detrimental goods trade deficit with China. The European Trade Commissioner, Maros Sefcovic, had previously proposed a significant reduction in the import of hybrid vehicles from China, aiming to counter a deficit that has surpassed €1 billion daily.

Irish Foreign Minister Helen McEntee emphasized that dialogue with China could potentially pave the way for negotiations in additional sectors to rectify the imbalance.

China's trade surplus is fueled by the export of state-subsidized goods that are unaffordable for domestic consumers, prompting the EU to grapple with the dilemma of permitting these imports to alleviate living costs while curbing them to revitalize its domestic industries. The EU's imports from China soared to €370 billion in 2025 and are projected to surpass €400 billion this year, a scenario European Commission President Ursula von der Leyen has labeled unsustainable.

European industry contends that the surge in Chinese exports, known as China Shock 2.0, is already precipitating factory closures and layoffs, notably affecting Volkswagen with 100,000 job losses. China has denied being the primary catalyst for the EU's predicament, presenting itself as a collaborator in resolving the issue. EU Commission President Ursula von der Leyen highlighted recent concerns over chemicals and machinery sectors during a recent address.

Ministers did not disclose specific short-term actions the EU may undertake alongside discussions with Beijing. Lithuania's Foreign Minister, Kestutis Budrys, suggested pharmaceuticals could also be part of the dialogue. Greece's Deputy Foreign Minister, Haris Theoharis, noted that while the EU has been conversing with China for years without success, this dialogue now appears imminent.

He reiterated the importance of maintaining an open-minded approach during the forthcoming meetings. France's junior trade minister, Nicolas Forissier, affirmed that dialogue is feasible as the EU represents a unified front. Chinese authorities acknowledged the efficacy of clear, candid, and firm communication in fostering productive conversations.