MNI: China Advisors See Rising Trade Frictions With EU

China needs to prepare for rising trade frictions with the European Union, as the EU’s recent dispute with the U.S. over Greenland is unlikely to provide Beijing much opportunity to draw the bloc away from its derisking strategy, Chinese advisers told MNI.

“The EU will not be the second Canada, which inked a trade deal with China to increase its bargaining chips with U.S. President Donald Trump,” said Zhao Yongsheng, a researcher at the University of International Business and Economics’ Research Institute for Global Value Chains. 

While domestic political needs are prompting Canadian Prime Minister Mark Carney to adopt a tough stance against the U.S., Zhao still described Canada’s deal with China as “tentative and symbolic.”

By contrast, the U.S.-EU alliance has not undergone any fundamental change despite the spat over Greenland.

“It’s more of a recalibration, as the U.S. wants Europe to shoulder more responsibility and expenditures, but Washington still needs Brussels,” Zhao said.

While the Greenland dispute may lead some EU capitals to consider whether their alliance with the U.S. should hold sway over their China policy, such a fundamental split with Washington is still far off, said Cui Hongjian, professor at the Academy of Regional and Global Governance at Beijing Foreign Studies University. 

For the moment, he added, Beijing should be wary of the potential for the U.S. and Europe to seek more common ground against China in areas including its access to the Arctic Circle.

All this means that Beijing, whose desire for an investment treaty with Europe has so far been rebuffed, is likely watching the dispute unfold but is unlikely to take any initiative, said Cui.

TRADE SURPLUS

Derisking from China remains a primary objective for the European Commission, which ran a record-high trade deficit with China of near USD300 billion last year. Chinese shipments to the EU grew by 8.4% year-on-year in 2025, while those to Germany and Italy saw double-digit growth, which helped offset a decline in exports to the U.S.

Zhao expects China’s export resilience to continue into 2026 given the competitiveness of the nation’s products fuelled by advantage in scale. Chinese exporters, however, will face tougher barriers, he said, citing the EU’s recent moves to impose a EUR3 customs duty on low-value parcels as well as anti-dumping duties of up to 110.6% on fused alumina.

Another trade dispute, around China’s exports of electric vehicles, which currently face a tariff of up to 35.3% into the bloc, has de-escalated, with the EU agreeing to Chinese assurances of voluntary price restrictions, noted Cui. This is intended to resolve trade issues at a technical level rather than elevating them to matters of economic security, though this week Brussels drafted a proposal to phase out components from high-risk suppliers, potentially affecting China's Huawei, in critical sectors.

“This will be the new normal: that the EU will keep using trade remedy measures against Chinese products, technologies, and industries,” he said.

China will focus on boosting domestic demand and creating more opportunities for expanding imports, such as via the Hainan Free Trade Port, but currency appreciation which would help tamp down the trade surplus will not be a major solution, an anonymous advisor told MNI. (See MNI: Hainan's FTP To Promote Yuan Internationalisation)