EU commissioners will meet on Friday for crunch talks aimed at imposing new restrictions on imports from China amid growing concern that Beijing is fuelling conditions for US-style rust belt towns in Europe.
The surge in imports of everything from electric cars to key components in machines, medical devices and foodstuffs has been dubbed China Shock 2.0, potentially mirroring the experience in the US 25 years ago when Beijing joined the World Trade Organization.
Commissioners representing each member state have been asked to bring examples of Chinese activities in all 27 portfolios, spanning trade to agriculture, defence, health and digital initiatives to the talks.
Sources said no decisions would be taken on Friday but the talks would help “align” the commission’s thinking and address overproduction in China, which is leading imports into the EU to be sometimes up to 40% cheaper than local products.
It will also feed into the next leaders’ summit on 18 June when China will be one of the handful of items on the agenda.
Ignacio García Bercero, a senior fellow at the Brussels thinktank Bruegel and a former official at the European Commission’s trade department, said the EU needed to formulate “a clearer strategy about how to deal with China”.
He said quotas and tariff rate quotas could be introduced on Chinese goods, as they were safeguards that were much faster to implement than tariffs and could focus on areas that China is targeting, such as hybrid cars and chemical components.
“I think that sometimes there’s a little bit of a tendency to sound very tough, but then not to act tough, and I don’t think that is a clever way to handle things.”
He said while showing it was prepared to act, the EU must also engage with China.
“The US has an engagement with China, Canada has an engagement with China. Everyone is having an engagement with China. I think in my view … we need to find a way to make sure that we are properly respected by China when we have that engagement.”
Earlier this month industry leaders told the Guardian of fears that EU factories would cannibalise themselves through their reliance on Chinese components, an issue which rarely makes the headlines.
Longer term, the EU could also look to a slew of laws: its never-used anti-coercion instrument; legislation such as the cybersecurity act 2.0 that could stop procurement of certain Chinese products and the industrial accelerator act commonly known as the “made in EU” law.
Grzegorz Stec, the head of the Brussels office of the Mercator Institute for China Studies (Merics), said China has not set out to destroy European business but it is potentially the consequence of its steely focus of the survival of its own industries now, and into a post-AI world future.
He said it would be very difficult to see China, now in the grip of its 15th five year economic and social plan, change its course.
“China is not deliberately trying to dismantle Europe’s economy, but that is the result of the economic model Beijing is doubling down on.
“For China, this is a strategic imperative, so it makes it hard for Europe to make Beijing change its behaviour.”
He said the “EU does have strong cards” – it is a very important market for China with consumers that buy higher value chain products China needs to continue exporting like EVs.
But he added that “this access to the EU is existential” and China will fight back hard to maintain it.
“If the EU threatens to limit that access, China will most likely retaliate. The EU should be ready for that.”