As the European Union's pressure over China's overproduction intensifies, China and the EU are expected to hold a high-level trade consultation at the end of next month. With the EU moving in earnest to regulate advanced industries such as electric vehicles, batteries, and telecom equipment, the two sides' trade conflict is approaching a critical juncture.
The South China Morning Post (SCMP) reported on the 22nd, citing sources, that Wang Wentao, Minister of China's Ministry of Commerce, is scheduled to visit Brussels, Belgium, on the 29th–30th of next month. Wang is expected to meet during this period with Maroš Šefčovič, the European Commission's executive vice president in charge of trade and economic security.
The talks are being pursued at a time when the EU is squarely targeting China's industrial subsidies and overproduction. With the EU reviewing a series of regulatory tools against China, the key question is whether the two sides can find common ground to prevent the dispute from escalating.
According to the SCMP, the European Commission plans to discuss the introduction of trade restrictions against China at the end of this month. China is also expected to be a key agenda item at the EU's regular summit next month.
The EU's 27 member countries are reportedly reviewing tougher China policies, including easing the criteria for invoking safeguards (emergency import restrictions).
Within the EU, there is growing concern that China's industrial subsidies and overproduction are exacerbating global market imbalances. Sabine Weyand, director general for trade at the European Commission, said at a recent European Parliament hearing, "The world can no longer absorb the trade imbalances generated by China's industrial model."
Weyand projected that China's share of global industrial output could rise from the current 30% to as high as 45% by 2030. By contrast, China's share of global consumption would remain at about 13%, she said. The point was that capacity is expanding rapidly, but domestic absorption is not keeping pace, pushing supply into overseas markets.
Even when not explicitly naming China, the measures the EU is pursuing effectively target industries where Chinese corporations are strong. Advanced manufacturing sectors such as electric vehicles and batteries are prime examples. Strengthening cybersecurity rules that could burden Chinese telecom equipment corporations such as Huawei and ZTE is also under review.
The EU earlier decided to restrict EU funding for energy projects that include Chinese-made inverters. This measure also drew a strong backlash from China.
China's Ministry of Commerce has criticized each EU measure against China as discriminatory. At the same time, it has warned of "resolute countermeasures," signaling the possibility of retaliation.
China has also reportedly argued at the World Trade Organization (WTO) Council for Trade in Goods that the EU's industrial policies and cybersecurity rules violate global trade norms.
The war of nerves between the two sides is also surfacing at public events. The SCMP reported that at a recent EU-hosted event in Beijing, when the European side raised the issue of China's excess supply, the Chinese side pushed back as protectionism, and emotions among participants ran somewhat high.