Between Competition and Cooperation: Europe’s China Balancing Act
As trade tensions rise and industrial pressures mount, the EU seeks a new equilibrium between economic resilience, strategic autonomy, and continued engagement with China.
Dear Readers of Eurasia Dispatch,
Welcome to the latest issue of the newsletter! As always, there is a lot to unpack, so let’s get down to business.
This week, Eurasia Dispatch covers:
Institutions
Member states
Business
Commentary
INSTITUTIONS
China-EU trade tensions and the search for a dialogue mechanism
China-EU economic relations are sending mixed signals, with both sides maintaining dialogue while tensions over trade and industrial policy continue to rise. Beijing has moved ahead with discussions to establish a China-EU Trade and Investment Consultation Mechanism, with Chinese Vice Commerce Minister Ling Ji visiting Brussels to discuss the framework’s arrangements. Further high-level talks are also expected.
At the same time, reports that China cancelled two planned meetings with EU officials highlight the uncertainty surrounding the relationship. The developments suggest that while both sides see value in maintaining communication channels, political and economic disagreements are affecting the pace and format of engagement.
For the EU, dialogue is taking place alongside efforts to strengthen trade defence tools and reduce strategic dependencies. For China, consultation mechanisms offer a way to address disputes without escalation. The challenge will be whether these channels can deliver practical results as both sides continue to adjust their broader economic strategies.
The Eurasia Dispatch Take: These signals come shortly before the upcoming EU leaders’ meeting, where China policy is expected to be among the issues discussed. The current picture reflects a combination of tougher public rhetoric and continued indications that both sides remain open to dialogue.
It is unclear whether the leaders’ meeting will provide greater clarity on the EU’s overall direction, as member states continue to balance economic interests, security concerns, and the need to engage with Beijing.
The lack of a consistent message may complicate the EU’s efforts to strengthen its position in relations with China. A clearer and more predictable approach is imperative if the bloc aims to be viewed as a more influential partner in negotiations and policy discussions.
MEMBER STATES
Belgium pushes for stronger China strategy
Belgian Prime Minister Bart De Wever has called for a more coordinated EU strategy towards China, arguing that the bloc needs to address growing concerns over industrial competition, trade imbalances and economic dependencies. Speaking ahead of upcoming EU discussions on China, De Wever said Europe needed to move beyond individual initiatives and develop a clearer long-term approach, including stronger use of trade defence tools, supply chain diversification and improved market access for European companies in China.
His comments come as EU leaders debate how to respond to Chinese industrial capacity and rising exports in sectors such as electric vehicles, clean technology and manufacturing. De Wever argued that Europe should avoid both excessive protectionism and subsidy competition, while focusing on resilience and economic security.
Chinese state media criticised the remarks, arguing that some European policymakers are framing normal economic competition as a security issue. The commentary also highlighted continued business ties between China and Europe, noting that many European companies remain active in the Chinese market.
The Eurasia Dispatch Take: One of the main obstacles to a more coherent EU China strategy has been internal divisions among member states. However, recent developments suggest that these differences may be narrowing, with a French-led policy paper receiving support from several countries and Germany signalling greater openness to stronger trade measures ahead of upcoming EU discussions.
A more assertive approach from the EU would likely face opposition from Beijing, but greater consistency may provide a clearer basis for managing the relationship. The current situation, where EU institutions advocate a tougher stance while member states send mixed signals, has created uncertainty. Spain’s initial support for the French-led initiative, followed by later distancing from it, illustrates these internal tensions.
A more defined EU position, even if more cautious or restrictive, could eventually provide a clearer framework for dialogue. Over time, a more stable foundation may allow both sides to address differences and rebuild cooperation on agreed terms.
BUSINESS
EU chemicals sector faces growing pressure, Brussels considers response to Chinese imports
The European Commission is exploring new measures to support the EU chemicals industry as producers face rising competition from Chinese imports and concerns over industrial mass production. EU leaders are expected to discuss possible responses at the 18–19 June summit, including stronger trade defence tools and potential sector-wide measures.
The pressure comes as several European chemical producers report declining competitiveness, with industry groups citing capacity reductions and job losses across the sector. China’s expanding chemical production, combined with lower energy costs and different regulatory conditions, has intensified competition in areas such as plastics and basic chemicals.
Brussels is considering options ranging from safeguards and targeted tariffs to a broader ‘overcapacity instrument’. However, these measures could take significant time to develop and implement. The debate also reflects wider EU discussions on economic security, as policymakers seek to balance industrial resilience, trade relations with China and the interests of European companies operating in the Chinese market.
The Eurasia Dispatch Take: The discussion around industry-wide protection indicates movement away from fragmented, product-specific measures towards more comprehensive tools targeting wider sectors. The rationale behind strengthening industrial resilience is clear, particularly in strategic industries. However, the effectiveness of such measures depends on whether they can achieve their objectives without significantly worsening EU-China economic relations. Beijing has consistently favoured dialogue over unilateral trade actions and may respond to broader restrictions with countermeasures. The challenge for the EU will be finding a balance between supporting European industry, reducing vulnerabilities and maintaining channels for economic cooperation with China.
COMMENTARY
Battery industry expert outlines Europe’s path to narrowing the gap with China
Ilka von Dalwigk, Director General of industry alliance ReCharge, argues that Europe still has a path to building a competitive battery sector, but only if it addresses manufacturing challenges and creates stronger policy support. Speaking at The Battery Show Europe, she highlighted that more than 700 GWh of planned gigafactory capacity has been delayed, reduced or cancelled over the past 18 months due to scaling difficulties and weaker electric vehicle demand.
According to von Dalwigk, Europe can narrow the gap with China through a combination of innovation, targeted industrial support and stronger demand incentives. She pointed to initiatives such as the €1.5 billion Battery Booster Facility and the proposed Industrial Accelerator Act, which could support early production and introduce “Made in Europe” preferences for certain battery components.
She assesses that Europe’s challenge is not only increasing capacity, but also improving efficiency, developing technology and creating a more predictable investment environment while maintaining international cooperation.
The Eurasia Dispatch Take: Closing the gap with China may be achievable in certain areas, but matching Beijing across every sector where it chooses to compete will be difficult given China’s long-term industrial planning, manufacturing scale and state capacity. A more sustainable approach may therefore be for Europe to focus on strengthening its own comparative advantages rather than attempting to replicate China’s model. Instead of treating industrial policy purely as a race, policymakers could prioritise sectors where Europe has existing strengths and can build strategic value. The objective may be less about competing on China’s terms and more about developing areas where Europe becomes difficult to replace. Creating strategic indispensability could offer a more realistic path than attempting to transform Europe into a competitor in every field.
BEFORE YOU GO
Trade tensions and battery ambitions have shaped the Eurasian discourse over the past weeks. Developments on these fronts will reverberate across global politics, trade, and defence. If you are interested in how these processes evolve, stay tuned for further updates in the next issue of Eurasia Dispatch! Thank you for reading, and we’d love to hear your thoughts—feel free to share your insights and feedback.
Until next time,
Eurasia Dispatch
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