MNI INTERVIEW: China's EU Surplus To Widen In 2026

China’s trade surplus with the European Union is likely to widen further over the next year after growing 17.7% in 2025, despite rising trade tensions and measures by Brussels aimed at limiting Chinese steel and vehicle imports, a leading European business representative in China told MNI.

“Although talk about Europe turning protectionist has increased, nothing indicates Brussels is planning to materially close itself off to Chinese exports,” said Jens Eskelund, president of the EU Chamber of Commerce in China.

“What we see on the ground, is that the imbalances will continue to grow given the huge momentum in Chinese exports to the EU,” Jens added, noting that the country's outbound shipments to the bloc grew 19% y/y to USD200.7 billion in the first four months of 2026.

China recently prohibited its firms from cooperating with EU Foreign Subsidies Regulation (FSR) investigations into unfair state support in public tenders and the Ministry of Commerce warned that China would retaliate against the use of new trade tools. However, Eskelund stressed EU plans were not a U.S.-style broad based “deficit shrinking” measures.

“Brussels is not seeking to reduce imports to zero, but wants to ensure a level of domestic autonomy and reduce supply-chain dependences in strategic sectors,” he added.

EC Vice President Stephane Sejourne told the Financial Times on Thursday that Brussels plans to broaden import quotas and tariffs in key industries such as chemicals going forwards. EU imports from China totalled roughly EUR560 billion in 2025, of which chemicals accounted for EUR34.1 billion, or 6%, according to MNI calculations.

Other major initiatives, such as the proposed Industrial Accelerator Act (IAA), which aims to boost industrial resilience by giving preference to European suppliers in strategic projects, are largely confined to publicly-funded procurement projects in strategic sectors, leaving the vast majority of China-EU trade flows unaffected, Eskelund added. “The policy is unlikely to have meaningful short-term effects because EU member states must still ratify the legislation, a process expected to take at least two years,” he said.

China’s Ministry of Commerce recently expressed “grave concern” over the legislation, arguing that it contains discriminatory provisions targeting foreign firms. Eskelund, however, said “China should not be alarmed as the measures fall far short of the 'Made in China'-style industrial policies Beijing has pursued for decades”.

YUAN

Eskelund reiterated concerns he raised last year that China’s managed currency regime continues to provide an unfair competitive advantage to exporters, despite the yuan appreciating 4%-5% against the euro so far in 2026.

“A nominal appreciation in the low single digits is not especially meaningful when you factor in persistently low inflation in China relative to the EU,” he said, adding that even conservative institutions such as the IMF estimate the renminbi remains undervalued by around 16% on a real effective exchange rate basis against a basket of currencies.