The European Union says its goods trade deficit with China tops €1 billion a day, threatening industry and many thousands of jobs. European Trade Commissioner Maros Sefcovic travels to Beijing for talks aimed at reducing the imbalance.
A deficit above €1 billion a day
Sefcovic is due to meet Chinese Commerce Minister Wang Wentao on Thursday and Friday. Their talks follow three months of discussions about the EU’s goods trade deficit and China’s restrictions on exports of rare earths and other critical minerals.
Sefcovic says he wants “tangible results” by October and some form of commitment to present to EU leaders at their Brussels meeting on October 15-16. China trade relations top the summit’s agenda.
The European Commission says the imbalance threatens European industry and employment. It wants changes to trade with China, including greater access to the Chinese market for European companies. EU trade officials say market access alone won’t resolve the deficit.
Dispute over exports and market rules
The European Commission is urging China to cap some exports, though it’s unclear which imports China might agree to curb. Last week, the Commission’s chief trade enforcement officer said nearly a quarter of all imports were rising at a worrying rate.
The officer pointed to abnormal increases in machinery, textiles, basic metals and chemicals. The Commission links those rising imports to its wider push to rebalance trade with China. The report did not name any export caps Beijing has agreed to accept.
European Commission President Ursula von der Leyen told the European Parliament last month that the trade imbalance had reached a tipping point. She said Europe would use all tools at its disposal to rebalance the relationship.
China rejects the EU’s account. Beijing says that calling attention to economic imbalances and overcapacity amounts to protectionism intended to pressure and restrict China.
In September, G20 finance leaders agreed to act against what they called “non-market” distortions that worsen imbalances. China’s representatives weren’t part of that agreement.
Rising vehicle imports
EU officials are especially concerned about rising car imports from China. Imports of plug-in hybrids into the EU rose 86% in the year to September, while prices fell 20%. Imports of battery electric vehicles rose 40%.
More than half of the vehicles came from China, even with EU tariffs on battery electric vehicles built there. Those figures put vehicle imports among the trade disputes facing the EU and China as officials prepare to meet in Beijing.
The talks aim to address the deficit and restrictions on critical mineral exports. Sefcovic wants results and a commitment he can take to EU leaders, while the Commission presses for greater access to China’s market and weighs export caps. Beijing, meanwhile, calls the EU’s focus on trade imbalances and overcapacity protectionist pressure.