Beijing softens on EU curbs to avoid blame for Europe’s unrest

The European Union is preparing to extend its curbs on Chinese imports of chemicals, furniture and machinery to fight a “China Shock 2.0,” after Beijing agreed in closed-door talks earlier this month to cap its hybrid car exports to the bloc. The European Commission plans to use safeguard measures to cut imports of chemicals, furniture and machinery from China, Bloomberg reported on Monday, citing people familiar with the matter. The measures, which could take the form of import caps or tariffs, may be presented as soon as the first quarter of 2027. They would comply with World Trade Organization (WTO) rules and apply to all countries outside the European Economic Area, the people said. A similar negotiation took place in Beijing on October 9, when EU Trade Commissioner Maros Sefcovic met with Chinese Commerce Minister Wang Wentao. Chinese officials, who had earlier refused to set quotas, agreed to cap hybrid car exports to the EU at 350,000 units a year. European Commission President Ursula von der Leyen said after an EU summit on October 16 that the hybrid deal would not fix the bloc’s structural trade imbalance with China. The EU’s goods trade deficit with China now exceeds €1 billion (US$1.12 billion) a day, she said. “And this is why we need to act,” said von der Leyen. “Our industries have called for action and we have heard them and we will respond, including some more safeguards.” The hybrid cap, which will cut China’s exports by almost half in 2027, was set at a level deemed high enough to deter retaliation, the people told Bloomberg. It is expected to take effect in December and last four years, with China’s quota rising by 6% a year after the first year. The deal marked a shift in Beijing’s tactics. After the EU imposed duties of up to 35.3% on Chinese-made battery electric vehicles in October 2024, China filed a complaint at the WTO and later imposed its own duties on European brandy, pork, and dairy products. WTO disputes typically take years to settle, and the organization’s Appellate Body has been unable to hear appeals since December 2019. Beijing also faces a tighter deadline, as its trade truce with the United States runs only until January 10, leaving little room for a second trade war with Europe. The two-month extension was announced on September 23, as Chinese President Xi Jinping arrived in the US for a state visit hosted by US President Donald Trump. Chinese media and commentators have largely played down Beijing’s concession in the hybrid car talks. Instead, they have highlighted the win-win nature of China-EU cooperation and stressed that Beijing is ready to respond to unreasonable curbs. “If imported products violate the rules and harm our domestic industries, we can launch investigations and deal with them in line with WTO rules. When others use the rules against us, we can use the same rules to protect our industries,” a Hubei-based columnist using the pen name “David Talks Tech” writes in an article. “An effective countermeasure does not fight on every front. It strikes where the other side depends on us and hurts the most.” “Expanding the confrontation without a clear aim will hurt both sides. A precise and rule-based response tells the other side that trade barriers are not cost-free and that every unreasonable restriction will be answered,” he says. “Disputes should be settled within the multilateral framework and based on evidence, not on who shouts the loudest.” He says Beijing need not treat all European companies as rivals and should keep its door open to firms that follow the rules and seek win-win cooperation, while responding precisely to restrictions that cross the line, as China-EU trade is too large to escape short-term friction. He says mature trade countermeasures should be precise rather than emotional, citing the anti-dumping probe that China’s Ministry of Commerce launched on October 3 into a raw material from the EU for dyes, pesticides and pharmaceuticals, called p-nitrotoluene. (The probe’s launch does not yet mean that dumping has been confirmed or imports banned.) Xue Taohong, a Hunan-based columnist, writes that China’s share of the EU’s chemical imports has doubled over the past decade to nearly 18%, making it the bloc’s largest supplier. She says China overtook Germany as the world’s largest machine tool exporter in 2025, with exports up 13% to €8.6 billion (US$9.6 billion) while Germany’s fell 10% to €7 billion. “Saying that China has taken away Europe’s market is too easy and too lazy,” Xue says. “Chinese firms are indeed entering the European machinery market quickly, but the troubles of some European companies also come from long research cycles, rigid organizations, runaway costs and a reliance on past strengths,” she continues. “It is understandable if European companies want to use import quotas to take a breath and buy time to upgrade equipment, cut energy use and rebuild research capabilities, in the coming two- or three-year window. But such measures should not last forever.” She adds that Chinese firms should change their mindsets as selling in Europe now requires local factories, after-sales networks, data compliance and long-term partners. Some observers say Beijing wants to bargain for generous import quotas and long transition periods so Chinese manufacturers have enough time to integrate into the EU’s supply chain, rather than face heavy tariffs. Pressure on two fronts A wave of protests, some of them violent, has swept across Europe in recent weeks, driven largely by economic hardship. In France, where the unrest has been most intense, President Emmanuel Macron said on October 22 that protest requests from people with no legitimacy would be banned. Some observers say Beijing is also going soft on Brussels because it does not want to become a scapegoat for these troubles. Cui Hongjian, director of the Center for EU and Regional Development Studies at Beijing Foreign Studies University, said the unrest, driven largely by public frustration over economic conditions, could strengthen the view in Europe that its problems stem mainly from external factors, such as China’s trade surplus. He said European politicians would likely take a harder line against China to appease voters and show they are shielding their societies from outside pressure and unfair competition. He said easing public discontent would require heavy government spending, which could push European governments to raise tariffs on Chinese goods to boost revenue, raise investment barriers for Chinese firms, and require these companies to create more local jobs. In fact, strong export growth of many Chinese products to the EU keeps giving Brussels new reasons to tighten its import rules against China. For the first time, Chinese car brands sold more vehicles in Europe than their Japanese competitors over an entire quarter, figures from research firm Dataforce show. In September, their share of the region’s car sales almost doubled year on year to 12.7%, driven mainly by hybrids, against 11.9% for Japanese brands. Five years ago, their share stood at only about 1%. With more EU restrictions expected, shipments of Chinese hybrids to Europe have picked up, while carmakers lay the groundwork for local production. BYD’s factory in Hungary is nearing completion, and Chery is preparing to build cars in Barcelona, while Leapmotor has begun producing its B10 sport utility vehicle at Stellantis’ plant in Zaragoza, Spain. Between January and September, China shipped US$31.2 billion worth of lithium-ion batteries to the EU, up 46% year on year and accounting for almost two-fifths of its total exports, according to Chinese customs figures. Exports to Austria surged 241%, with Hungary and Poland posting gains of 156% and 132%, as Chinese carmakers ramped up output in the region. Chinese inverter shipments to the bloc grew 34.5% to US$1.7 billion in the third quarter, despite Brussels’s May decision to exclude Chinese suppliers from EU-funded projects over cybersecurity and dependency concerns. Europe is not Beijing’s only worry, as its technology decoupling with the US is also intensifying. On October 22, US President Donald Trump declared imports of wind turbines and their parts a national security threat, while the US Treasury proposed expanding its ban on US investments in Chinese technology firms to hypersonic systems, supercomputing, biotechnology and artificial intelligence. Read: EU weighs safeguard tariffs as China refuses hybrid car limits Follow Jeff Pao on X at @jeffpao3