China’s commerce ministry has issued a sharp warning to the European Union ahead of expected high-level talks in Beijing next week. The ministry said China would “respond firmly” if the EU imposes restrictions on Chinese companies or products.
According to the ministry, such steps would “seriously undermine mutual trust” and disrupt negotiations at a time when both sides have already been engaged in trade talks throughout the summer.
Europe is trying to reduce its record trade deficit with China by October. EU Trade Commissioner Maroš Šefčovič told Euronews this week that Beijing must deliver “concrete results” by October or face “harsher measures.” He is expected to travel to Beijing next week.
Earlier this week, Rhodium Group’s Noah Barkin said Europe was weighing measures that could effectively shut China out of the bloc’s market. He said Germany and France are finalizing a joint paper urging the European Commission to speed up work on a tool that, in the words of one European official, would allow Brussels “to cut China off from the European market within 24 hours.”
Barkin said the measures could resemble the U.S. Section 301 tariff approach. China’s commerce ministry said its statement was a response to Europe’s consideration of “301”-style tools.
While ASEAN overtook the EU in 2020 as China’s biggest goods trading partner, the EU’s trade deficit with China remains the largest in the world and has recently surpassed that of the United States. Including services, the EU says it was China’s top trading partner last year, with combined trade of 880 billion euros, or nearly $1 trillion.
