EU Warns China Over 1 Billion Euro Daily Trade Deficit

The European Commission has warned China to make a credible effort to rebalance trade imbalances by October or face the use of all available regulatory and economic tools. President Ursula von der Leyen stated that the trade deficit has reached a "tipping point," totaling 1 billion euros per day, and warned that a "second China shock" is already causing de-industrialization across European factories.

German Chancellor Friedrich Merz supported the push for stronger trade defense instruments, arguing that China combines market dynamism with state intervention, overcapacity, and subsidized exports to pressure European companies. Merz advocated for diversification through new trading partners to build resilience, noting that Germany has already reached political agreements with India, Australia, Indonesia, and Mexico.

EU trade chief Maros Sefcovic and Chinese counterpart Wang Wentao recently discussed export management, European market access, and rare earth export controls. Sefcovic is scheduled to chair a meeting in Beijing next month to seek material results regarding European exports and tariff regimes. EU leaders will meet in mid-October to evaluate the situation and consider new instruments to counter China's trade practices.