Economic Security Comes First: The EU Raises the Stakes with China
With the trade deadline approaching, Europe is signalling that dialogue alone will no longer be enough to address longstanding economic concerns.
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
October EU-China trade deadline faces mounting pressure
The prospects of achieving the “tangible results” promised by October in EU-China trade talks appear increasingly uncertain as Brussels continues to prepare additional defensive measures while hardening its assessment of Beijing. Recent reports indicate that the European Commission is establishing a cross-departmental task force to prepare for potential supply chain disruptions, particularly involving rare earths, alongside new initiatives to reduce strategic dependencies and diversify critical imports.
At the same time, senior Commission officials have indicated that dialogue alone will not be sufficient, signalling that unilateral trade defence measures could be introduced before October if negotiations fail to produce satisfactory progress. Separately, EU foreign ministers adopted a policy paper that described China as a ‘critical long-term strategic challenge’, citing trade imbalances, technological competition, critical raw materials, and Beijing’s support for Russia.
The Eurasia Dispatch Take: These developments suggest that while formal dialogue with China continues, EU institutions are also preparing for the possibility that negotiations may not deliver meaningful progress by the autumn. The prominence given to potential trade defence measures and contingency planning in recent weeks points to an increasing emphasis on managing risks alongside maintaining dialogue. This could reflect an effort by Brussels to strengthen its negotiating position by signalling its willingness to act if talks prove unsuccessful. Alternatively, it may indicate limited expectations that the current negotiations will produce substantive breakthroughs. Whatever the motivation, recent public messaging from EU institutions has focused more on trade defence, economic security, and strategic resilience than on expanding cooperation, suggesting that the relationship is entering a more cautious and security-oriented phase, even as both sides continue to engage through formal dialogue.
MEMBER STATES
France and Germany seek a common China trade strategy
France and Germany have agreed to develop a joint roadmap by September to address what they see as growing trade imbalances with China, signalling closer alignment between the EU’s two largest economies. Speaking after a bilateral government meeting near Cologne, French President Emmanuel Macron said the roadmap would strengthen the European Commission’s mandate to accelerate trade investigations and deploy trade defence instruments where necessary.
Macron argued that Chinese trade practices are putting pressure on European industries, highlighting sectors including chemicals, machine tools, and automotive manufacturing. German Chancellor Friedrich Merz echoed these concerns, pointing to the EU’s widening goods trade deficit with China, which reached around €360 billion in 2025, and said the imbalance should be addressed to protect European industry.
The two leaders also raised broader structural issues. Macron called for dialogue with Beijing on exchange rates and financial market access, while Merz questioned why the renminbi is not freely convertible if its valuation reflects market conditions. The roadmap is expected to be prepared by the two countries’ economy, finance, and foreign ministers before being presented in September.
The Eurasia Dispatch Take: Germany’s traditional caution towards tougher EU measures on China appears to be diminishing, suggesting a greater willingness to align with member states advocating a more assertive trade policy. This shift could have important implications for EU–China relations, as it strengthens the political backing for the European Commission’s de-risking agenda and trade defence measures. It also reflects a broader trend in which strategic and economic security considerations are increasingly taking precedence over purely commercial interests. At the same time, a more restrictive trade relationship with China is likely to carry economic costs, including higher prices for numerous goods and increased adjustment costs for businesses. While it remains too early to assess how this evolving German position will influence the ongoing EU–China trade negotiations, it is unlikely to make searching for a negotiated compromise any easier.
BUSINESS
EU imposes record €550m fine on AliExpress
The European Commission has imposed a record €550 million fine on Alibaba-owned AliExpress for failing to prevent the sale of illegal and unsafe products on its platform, marking the largest penalty issued under the Digital Services Act (DSA). Following an investigation launched in 2024, the Commission concluded that AliExpress had not put in place adequate systems to identify and remove counterfeit goods and unsafe products, including toys, cosmetics and other consumer items. Regulators also found that the platform devoted insufficient resources to content moderation and that its recommendation and advertising systems continued to promote products that had already been identified as non-compliant.
The fine significantly exceeds previous DSA penalties imposed on Temu and X, although it remains well below the maximum available under the legislation. AliExpress has rejected the decision as disproportionate and confirmed that it will appeal. The company must also submit an action plan by October outlining how it intends to address the identified shortcomings or risk further enforcement measures. The decision underscores Brussels’ increasingly assertive enforcement of the DSA against major online platforms operating in the European market.
The Eurasia Dispatch Take: The popularity of Chinese e-commerce platforms has grown as European consumers seek lower-cost alternatives amid persistently high living costs and energy prices. This makes effective product safety enforcement increasingly important, ensuring that consumers benefit from competitive prices without being exposed to counterfeit or unsafe goods. From that perspective, the Commission’s action is consistent with its broader objective of strengthening consumer protection in the digital marketplace. Financially, the €550 million penalty represents only a small fraction of Alibaba’s annual global revenue, suggesting that its immediate commercial impact is likely to be limited. However, the decision carries greater symbolic significance, signalling the EU’s willingness to enforce the Digital Services Act against major platforms and potentially creating reputational costs for companies found to have fallen short of the bloc’s regulatory standards.
COMMENTARY
Competing visions for EU-China trade strategy
Two recent commentaries illustrate sharply contrasting views of how the EU should approach its increasingly strained economic relationship with China. In an interview with Euronews, European Parliament China delegation chair Engin Eroglu argued that the EU holds significant leverage through its large consumer market. He maintained that tighter restrictions on Chinese exports could expose structural weaknesses in China’s export-led economy, while defending stronger trade measures to protect European industry from subsidised competition.
By contrast, an EUobserver commentary penned by Frances Li, a Europe analyst with the Economist Intelligence Unit in London, warned that an increasingly confrontational strategy risks provoking costly escalation. It argued that Europe’s dependence on Chinese supply chains, particularly for critical raw materials, leaves the EU vulnerable to escalation and that replacing these links would require enormous investment over decades. Rather than relying on tariffs and restrictions, the article advocates a more defensive industrial strategy centred on strengthening European competitiveness, supporting emerging industries, and reducing future dependencies without directly targeting China.
The Eurasia Dispatch Take: The two pieces highlight the growing debate over whether the EU should prioritise economic pressure or a longer-term strategy of strengthening its own resilience. Anti-dumping measures have been part of the EU’s trade policy for many years, yet concerns over industrial competitiveness and trade imbalances have persisted, suggesting that such instruments alone may have limited effectiveness. By contrast, a defensive industrial strategy focused on reducing strategic dependencies and supporting domestic industries offers a different approach. Given the high degree of economic interdependence between the EU and China, this framework seeks to enhance Europe’s long-term competitiveness while limiting the risk of further escalation. Whether such an approach proves more effective will depend on its implementation and the willingness of both sides to manage differences through dialogue rather than retaliation.
BEFORE YOU GO
Trade defence, a record-breaking AliExpress fine and converging member state policies 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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