The European Union is approaching a phase of growing trade tensions with China.
In Brussels, this is being referred to as the “Chinese Shock 2.0”; it is no longer a potential threat but a full-fledged phenomenon that is doing everything in its power to put pressure on European industry.
On May 29, a closed-door meeting of the College of Commissioners took place, during which the issue of possible retaliation by Beijing was raised; however, this will not prevent the Commission from taking action.
Brussels is seeking to develop new autonomous trade instruments, including the future “overcapacity instrument,” which will be used to restrict access to European markets in cases where excess Chinese production poses a threat to sectors deemed strategic.
The Anti-Coercion Instrument has already been approved by the Council, and other cybersecurity regulations could also restrict the presence of Chinese companies in the EU’s sensitive digital infrastructure.
Beijing has exported enormous quantities of goods at prices that are simply unsustainable for European competitors; this is precisely why Brussels has had to take the necessary steps to address a structural problem. The trade deficit between the EU and China continues to grow, and since the pandemic, China has increased its share of global exports, surpassing Europe.
China has expanded its leverage by introducing new regulations on industrial and supply chain security, which allow it to identify and counter foreign measures deemed discriminatory. These provisions provide for the ability to launch investigations and take countermeasures against economic blockades that could pose a threat to Chinese interests.
In addition, regulations on cross-border data flows represent another measure, meaning that China’s strategy already has an operational regulatory framework.
Europe needs new defensive measures to preserve its industrial competitiveness. France, the Netherlands, Italy, Lithuania, and Spain had supported the need to accelerate the adoption of tariffs and protective measures, but since then Madrid has shown greater caution, while Germany continues to maintain a cautious stance, concerned about the possible consequences for its exports to the Chinese market.
Unfortunately, China’s production overcapacity threatens not only Europe but also Japan, South Korea, and the United States. Beijing could take advantage of these divisions among its trading partners by exerting more targeted pressure on the most critical governments.
A significant opportunity could be the G7 summit, hosted by France, which could help forge a shared strategy on upcoming global imbalances; Paris has long advocated for a more decisive common approach, even as it continues to defend the principle of European strategic autonomy.
Greater cooperation among G7 countries is interpreted by some critics as a policy of containing China, leading to an economic rift between the two sides.
The ultimate goal is not merely to distance itself from Beijing, but above all to implement rules for fairer competition and reduce dependencies considered strategically risky.
The European Union does not aim for a drastic estrangement from its Chinese partner, but rather to reduce risk.
In conclusion, many European governments are maintaining fairly cautious stances in the face of possible countermeasures from Beijing, taking into account China’s recent restrictions on rare earths and its willingness to engage in protracted trade disputes.
Member states are struggling to find a common position, preferring to delegate this decision to Brussels, which will need to be able to coordinate effective action while avoiding internal divisions that could undermine its ability to respond.
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