EU prepares tougher trade measures as China tensions rise

The European Union is preparing new trade measures against China as concerns grow over imports, industrial competition and the bloc’s widening trade deficit. EU trade chief Maros Sefcovic is scheduled to meet Chinese Commerce Minister Wang Wentao in Beijing on October 8 and 9. The talks are expected to assess progress in rebalancing trade ties since a previous confrontation in June.

The European Commission is seeking voluntary Chinese export limits on products including plug-in hybrid electric vehicles. Officials said discussions had made progress, although Beijing has publicly rejected suggestions that it should curb shipments. The outcome of the meetings will inform an EU leaders’ summit in Brussels the following week.

Sources said the Commission still expected firm action this year, regardless of the results in Beijing. Possible measures include a diversification instrument requiring companies in critical sectors to maintain at least three suppliers in different countries. Another proposal would create a fund to compensate businesses affected by retaliation from China or other trading partners.

Reports have also described a possible emergency trade power that could allow the Commission to restrict imports rapidly when dependency or overcapacity reached a systemic level. France and Germany are expected to present a joint paper on the proposal. The China Chamber of Commerce to the EU warned that such a tool could weaponise trade policy and urged the bloc to preserve multilateral rules.

Germany has moved closer to Brussels and Paris, with its government notifying the Commission of tighter telecoms security and certification rules aimed at restricting some network vendors.