The rollercoaster of EU-China relations is now heading decisively downhill

Since the end of the COVID-19 pandemic and the beginning of Russia’s invasion of Ukraine, EU-China relations have resembled a rollercoaster creeping steadily downwards. Increasingly difficult summits, even when framed by carefully worded and polite joint statements, mask a structural deterioration that no amount of diplomatic theatre can hide.

In March 2023, European Commission President Ursula von der Leyen launched the “de-risking, not decoupling” strategy in a major speech. While full decoupling from China was neither viable nor in Europe’s interest, she emphasised that the European Union had to reduce dangerous dependencies, tighten controls on sensitive technologies and address unfair competitive practices. The Commission quickly translated this into action, enacting tighter investment screening mechanisms, export controls on advanced semiconductors and other dual-use goods and an anti-subsidy investigation into Chinese electric vehicles that ultimately resulted in increased tariffs.

The December 2023 summit saw a somewhat improved tone, with then-High Representative Josep Borrell noting that both sides recognised the relationship’s importance and the need to manage differences – yet the summit remained largely focused on grievances and finished without substantive outcomes. Since then, substance has continued to give way to diplomatic ritual.

By the 2025 EU-China summit, the annual high-level meeting had become little more than a Brussels delegation travelling to Beijing to catalogue European grievances over subsidies, industrial overcapacity and lack of reciprocal market access – and to be met with Chinese counter-lectures on multipolarity and Western double standards.

During the European Council summit that concluded on 19 June 2026, the discussion on China outwardly followed the established pattern – but this time, it was pushed to a new sense of urgency. After more than two hours of debate – unusually lengthy for a topic normally handled in coded language – EU heads of state gave the Commission a clear political mandate to strengthen the bloc’s defences against China’s industrial overcapacity and other forms of unfair competition. The official conclusions referred only to “global macroeconomic imbalances”, avoiding directly naming Beijing. Yet the signal was unmistakable: the Commission would accelerate work on new trade defence tools while maintaining channels for engagement. Von der Leyen underscored the urgency, noting that the EU’s trade deficit with China had ballooned to approximately €360 billion per year – nearly €1 billion every day.

At the same time, the G7 summit hosted by France in Évian just days before did not consolidate support for a harsher European position on China. In fact, the final communiqué was remarkably vague about forging a united front against China’s unfair economic practices.

While it reaffirmed concerns about Indo-Pacific security and called for addressing “large and persistent global imbalances” through dialogue with ‘major economies’ – an implicit reference to China – it contained no concrete commitments on coordinated trade-defence measures, joint supply-chain resilience initiatives or collective action against subsidised overcapacity. Without robust G7 backing, any decisive EU action risks being framed by Beijing as unilateral aggression, potentially triggering targeted retaliation against individual EU countries or key export sectors.

The EU itself remains deeply divided on the speed and depth of any response. Spain’s Prime Minister Pedro Sánchez has emerged as one of the more engagement-friendly voices, wary of escalation. In contrast, German Chancellor Friedrich Merz has moved noticeably closer to France’s traditionally hawkish stance. Merz spoke unusually bluntly about China “flooding” European markets with subsidised goods and even floated the idea of currency coordination talks to rebalance trade.

Other EU countries continue to waver, torn between the fear of Chinese economic retaliation and the longer-term threat of European de-industrialisation. This persistent internal fragmentation ensures that every incremental step forward is accompanied by hesitation, dilution or outright delay. The necessary defensive toolkit is already well known: accelerated implementation of instruments such as the Industrial Accelerator Act (or equivalent strategic autonomy measures), robust and swift application of trade-defence instruments against subsidised overcapacity, stricter FDI screening in critical sectors, outbound investment screening to safeguard Europe’s remaining technological edge and coordinated public-procurement rules that can legitimately favour European production in strategic areas. These do not require fresh conceptual breakthroughs, only the political will to enact and enforce them consistently across the single market.

But successful implementation of defensive measures will only buy time. China’s competitive advantages in sectors ranging from electric vehicles to batteries and solar panels to critical raw-materials processing are no longer solely the result of state subsidies and non-market practices. They also stem from genuine strengths: unmatched manufacturing scale, rapid iteration in innovation and highly integrated domestic supply chains. A genuine shock to Europe’s own competitiveness is needed, including: radical simplification of permitting procedures (which routinely cause multi-year delays for major green and digital infrastructure projects), large-scale coordinated public and private investment in strategic technologies on the scale of the US CHIPS Act or Inflation Reduction Act, industrial-scale skills and reskilling programmes to close widening gaps in advanced manufacturing and engineering talent and a pragmatic approach to European preference in public procurement and critical supply chains where justified by security or resilience considerations. Yet these defensive tools will merely slow down China’s takeover of European market share in global export markets; reversing it requires measures to increase European competitiveness.  

The rollercoaster has not yet reached the bottom. Further summits will convene, further mandates will be issued and further communiqués will be published. But the direction of travel is now unmistakable. EU-China relations have shifted from managed competition toward structural confrontation in several key economic and technological sectors. Europe’s internal divisions and notoriously slow decision-making processes are rendering the descent more volatile and dangerous than it needs to be. The central question is no longer whether the relationship will continue to deteriorate – it will – but whether Europe can muster the defensive instruments and an ambitious G7-backed offensive competitiveness agenda required to navigate this new, more adversarial reality with confidence and strategic clarity.

This newsletter feature has been republished in El Español.

ZhōngHuá Mundus is a newsletter by Bruegel, bringing you monthly analysis of China in the world, as seen from Europe.

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