Europe’s goods deficit with China reached €360 billion ($402 billion) last year, and the gap had already hit €200 billion in the first six months of 2026. European Commission President Ursula von der Leyen called the figure “unsustainable” and promised the EU would use every possible means to reduce it. Leaders meet in Brussels on Thursday for a two-day summit to decide how.
China’s exports jumped 36.3% in September from a year earlier, its customs agency said Wednesday. That’s awkward timing for anyone hoping the problem is easing.
The Industrial Bill
Behind the summit’s numbers are jobs. Chinese exports of cars and other manufactured goods are surging, threatening local industry and mass layoffs across the continent. Germany’s Volkswagen alone is cutting 100,000 jobs. Higher US tariffs add to the squeeze, leaving Europe’s industrial base under pressure from both sides at once.
Trade deficits aren’t limited to one sector. They run through machinery, textiles, basic metals, chemicals and cars. On Thursday, leaders will first consider whether a preliminary deal sketched out with Beijing to stem a surge in hybrid car imports is a good enough opening step to keep talking to China, rather than shift to tougher restrictions.
Trade Commissioner Maros Sefcovic called the deal a “very good result” last week, while cautioning that it was only a first step toward rebalancing. On Monday, a senior Commission official went further, saying dialogue alone was unlikely to finish the job. The EU executive has shifted its focus from winning better access to Chinese markets toward letting China sell less into the bloc.
Berlin Joins Paris
The sharpest change is political. A Franco-German paper presented last week calls for measures on chemical imports and PET, the plastic widely used in packaging. It also urges limits on companies’ reliance on single sources for critical supplies, along with quick retaliation against countries that harm the bloc. The Commission will likely propose the first such measure in December, even if leaders decide to keep talking to Beijing meanwhile.
For Germany, it’s a U-turn. Just two years ago, Berlin strongly opposed EU plans to impose tariffs on China-built electric vehicles. Now it has joined France’s protectionist stance. “It is significant that a policy switch that had been boiling under the surface in Berlin for the last few weeks and months, is now official,” said Sander Tordoir, chief economist at the Centre for European Reform. “And it is significant that the two most important EU member states clearly see eye to eye on how to deal with the second China shock.”
Leaders Under Pressure at Home
Many leaders arriving in Brussels would welcome a break from domestic troubles. French President Emmanuel Macron faces student protests and steep bond losses amid a budget deadlock. He lost his parliamentary majority in 2024, two years ago, and must step aside next year when his term ends, leaving European policy as one of the few levers he still holds. German Chancellor Friedrich Merz is struggling to get his coalition on track after regional vote defeats.
Spanish Prime Minister Pedro Sanchez trails in the polls ahead of a snap election he called for November 29, about six weeks away. He has pushed for a softer line toward Beijing as Spain welcomes Chinese investment, and polls show the centre- and far-right could win enough votes to form a government. Polish Prime Minister Donald Tusk and Italian Prime Minister Giorgia Meloni arrive from relative strength, though rising inflation and energy costs are hampering Italy. In Poland, the nationalist president has blocked the government’s agenda, while weariness towards refugees and fears of war in Ukraine spilling across the border have pushed voters toward far-right parties.
Across Europe, mainstream politicians face far-right and nationalist parties buoyed by many voters’ sense that the economy isn’t generating enough wealth to fund the public services they expect.
The agenda extends well beyond China: Ukraine, including US President Donald Trump’s diesel deal with Russia, the Middle East, defence, migration, the EU’s long-term budget and enlargement of the 27-country bloc. Trade chief Sefcovic met Chinese Vice Premier He Lifeng in Beijing on Friday, Oct. 9, 2026.
Why This Matters:
A €360 billion annual deficit isn’t an abstraction. It shows up in factory closures, shrinking tax bases and strain on public services that voters say they can’t see being funded. The summit also reveals how national politics shapes European policy: leaders weakened at home are looking to Brussels for results, while far-right parties gain from the same economic anxiety. Whether the EU can act decisively, and whether member states with different exposure to Chinese investment stay aligned, will test whether a bloc of 27 can defend its industrial base without handing more ground to its critics.