EU-China trade talks begin amid warnings of limited breakthroughs

Maros Sefcovic, the European Union's trade chief, is traveling to Beijing this week for two days of negotiations that both sides acknowledge carry enormous weight. The talks are meant to address a widening chasm between what Europe buys from China and what China buys from Europe—a gap that reached roughly 360 billion euros in 2025, with the EU importing far more than it exports. The meetings come as European leaders grow increasingly anxious about what some are calling "China Shock 2.0," a phrase meant to capture a troubling shift: Chinese manufacturers are no longer competing mainly on price in low-tech sectors. They are moving upstream, into cars, machinery, chemicals, and other industries that have long anchored European prosperity. The first shock, two decades ago, flooded global markets with cheap Chinese goods. This one is different, and potentially more destabilizing.

The EU and China have been in talks since June, but the momentum has been building toward this week's meetings ever since Sefcovic declared in the summer that Brussels expected "tangible results by October." That language raised the stakes considerably. Yet almost everyone watching the process is tempering expectations. Penny Naas, who directs the Brussels office of the German Marshall Fund, put it plainly: there may be "a few crumbs," but no major breakthrough. Zhu Tian, an economics professor at the China Europe International Business School in Shanghai, suggested the best outcome might be "agreements on some specific issues, rather than any broad settlement." The EU itself seems to have internalized this pessimism. Even as Sefcovic heads to Beijing, the European Commission is working in parallel on new trade defense tools, expected to be unveiled to EU leaders in December. The message is clear: Brussels is not counting on Beijing to solve this problem.

What exactly is the problem? Denis Redonnet, the EU's trade enforcement chief, told the European Parliament last week that sectors across the economy are experiencing what he called "sustained and abnormal" import surges from China. The affected industries include machinery, textiles, basic metals, and chemicals. Taken together, these categories represent nearly a quarter of all imports flowing into the EU at the moment. The scale is staggering. Sefcovic has outlined three main objectives for the talks: curbing export surges from China, particularly in critical sectors like automobiles; opening Chinese markets to more European goods; and securing a system of export licensing for rare earths and other materials, after China tightened restrictions on these supplies last year. Europe has floated the idea of voluntary limits—asking China to cap hybrid car shipments, for instance—but Beijing has made clear it opposes import quotas of any kind.

China's negotiating position is constrained by forces largely beyond its control. Domestic demand inside China remains weak, which means the government depends heavily on exports to maintain growth. That dependency limits how much flexibility Beijing has to make concessions. The EU, aware of this structural reality, is preparing for the possibility that the talks will yield little. Several EU nations, including France, have pushed for what they are calling a "European equivalent of Section 301"—a reference to the trade tool that Donald Trump used as president to investigate foreign practices he deemed unfair and to impose retaliatory tariffs. The very mention of such a mechanism has prompted Beijing to warn it would "respond resolutely" to any "discriminatory restrictive measures." These are not idle threats. China has retaliated against EU trade defense actions before, slapping duties on European cognac and launching anti-dumping investigations into pork and dairy products.

The EU is also developing a separate tool designed to help European businesses reduce their dependence on Chinese suppliers in critical sectors, using funding to support diversification. But here lies a deeper uncertainty: it remains unclear how unified Europe actually is on how far to push back against China. Germany, whose largest trading partner is China and whose economy depends heavily on exports, has historically been cautious about aggressive trade measures. Yet even Germany's stance has begun to shift, as German policymakers worry that Chinese overcapacity is undercutting their own export-driven model. The question that hangs over this week's negotiations, and over the EU's broader strategy, is whether Europe has the will to match its capability. As Naas observed, the EU certainly has "the ability to do something more aggressive to stem this China 2.0 shock." The real question is whether it will.