EU Says It’s Ready to Get Tough Against Chinese Trade Imbalances

European Union officials insist they need to see a credible effort from China to rebalance its trade relationship with the bloc by next month or they will use all “tools” at their disposal to fix the situation.

EU trade chief Maros Sefcovic held a call with his Chinese counterpart, Wang Wentao, on Thursday, and discussed the management of exports to the EU, European access to China’s market and export controls of rare earths, according to a statement from European Commission Spokesman Olof Gill.

“While genuine engagement remains a priority, it’s equally important that first concrete outcomes are delivered at” a meeting in Beijing in October, which Sefcovic will chair, Gill said. That will signal that “we are moving from rhetoric to results,” according to the statement.

The EU’s trade deficit with China now exceeds €1 billion ($1.1 billion) a day, leading the commission, which handles trade matters for the bloc, as well as member states including Germany to harden their stance toward Beijing. EU leaders will meet in mid-October to discuss the situation and possible new instruments they can use to strike back against China’s trade practices.

In her state of the union address on Wednesday, Commission President Ursula von der Leyen warned that the bloc’s trade deficit with China had reached a tipping point. “Some say the second China shock is looming,” she told lawmakers in Strasbourg, France. “But it’s already here.”

“Let me be clear: we will use all the tools at our disposal to rebalance our relationship,” she said. “Words are good. But deeds are better.”

Sefcovic told reporters on Wednesday that when he visits China next month, he wants to obtain “clear indications” that negotiations are leading toward a positive outcome and that talks will bring “material results.” Discussions will include boosting European exports to China and different tariff permitting regimes.

Photo: Photo credit: Sebastian Lopez Brach/Bloomberg