Listen: What’s stopping the EU from being tougher against China?

Production: By Europod, in co-production with Sphera Network.

EUobserver is proud to have an editorial partnership with Europod to co-publish the podcast series “Briefed” hosted by Léa Marchal. The podcast is available on all major platforms.

Find the full transcript below:

The 27 EU member states all agree on one thing: Europe needs new solutions to withstand China’s growing economic pressure.

But when it comes to taking concrete and far-reaching action, that unity quickly disappears.

So what can the EU actually do to push back against the Chinese giant?

Up to 100,000 jobs could disappear at Volkswagen in Germany.

That’s the rumour that has been circulating for days. The possible closure of four factories alone could leave 45,000 people without work. On top of that, Volkswagen has already announced plans to cut another 50,000 jobs by 2030.

It would be the biggest restructuring in the company’s history.

So, what happened?

The group’s sales have been declining for years.

Volkswagen is losing market share in the United States, where tariffs are now extremely high. It’s also falling behind in China — and especially in Europe.

Yet at the end of 2024, the European Union took a major step to protect its automotive industry by imposing additional tariffs of up to 35 percent on Chinese battery electric vehicles.

But it wasn’t enough.

Since last year, sales of Chinese electric cars have actually increased by another five percent across the EU. Today, one in every ten battery electric cars sold in Europe is Chinese.

And when it comes to hybrid vehicles, which are not covered by the EU tariffs, the situation is even more striking: Chinese manufacturers now account for almost a quarter of the European market.

The same trend can be seen in other sectors.

Imports from China continue to rise, and as a result, the EU’s trade deficit with China has widened even further.

It was against this backdrop that China’s Commerce Minister, Wang Wentao, visited Brussels yesterday to meet European Trade Commissioner Maroš Šefčovič.

So, what came out of the meeting?

As usual, and this was far from their first meeting, they simply restated positions that remain fundamentally opposed.

I discussed this in a previous episode of Briefed.

While the EU wants China to open its market and reduce the industrial overcapacity that is flooding global markets, Beijing has no intention of doing so. Instead, it continues trying to extract concessions from the Europeans.

At times, it feels like a dialogue of the deaf.

And despite the fanfare surrounding the announcement of a new consultation platform on trade and investment, no one should assume that the two sides are any closer to resolving their differences.

Before this, they had already established a high-level economic and trade gialogue, along with several joint working groups.

None of these initiatives has succeeded in narrowing the gap between their positions.

If Maroš Šefčovič, widely regarded as one of the EU’s most skilled negotiators, can’t secure meaningful concessions from Beijing, it’s difficult to imagine someone else succeeding.

So, what happens next?

Following instructions from EU leaders, the European Commission is now preparing a new package of measures to defend Europe against what it considers unfair Chinese trade practices.

Several options are being explored.

New tariffs on critical sectors, for example, including chemicals and industrial machinery.

The Commission is also considering requiring companies to diversify their supply chains when they become too dependent on China.

And it has proposed introducing a European preference in public procurement—giving EU suppliers an advantage over foreign competitors.

But all of these proposals require the approval of the member states.

And that’s often where things become complicated.

Several governments fear the economic consequences of taking a tougher stance against Chinese goods and services.

Spain is among them.

Germany, too, spent years opposing stronger measures against China.

They know perfectly well that if Beijing feels it is being discriminated against, it has plenty of ways to retaliate.

We’ve seen it before.

China can bring European factories to a standstill simply by restricting exports of critical raw materials such as rare earths—or even semiconductors.

The EU therefore faces an almost impossible balancing act.

It wants to keep dialogue with China alive while at the same time protecting itself against potential economic coercion.