European Trade Commissioner Maros Sefcovic has arrived in Beijing for talks on the European Union's growing trade deficit with China.
Sefcovic is scheduled to meet Chinese Commerce Minister Wang Wentao over two days on Thursday and Friday. The meeting follows months of discussions over the EU's trade deficit with China, which runs at more than 1 billion euros ($1.12 billion) a day, as well as Beijing's export restrictions on rare earths and other critical minerals.
Meanwhile, Chinese companies are increasingly challenging leading European car brands. According to the Financial Times on Wednesday, China has rejected the EU's request for voluntary restrictions on exports of its hybrid vehicles as the two sides enter negotiations. The newspaper, citing two diplomats briefed on the plan, said the European Commission now hopes to persuade Beijing to accept a unilateral EU measure limiting imports of hybrid cars.
The two days of discussions come as a majority of EU lawmakers called for a tougher trade policy toward Beijing in a non-binding resolution on Wednesday. China's Commerce Ministry said it would have a "firm response" to protect its industries if the EU takes restrictive measures targeting Chinese companies or products.
Germany and France propose a rapid EU measure
French President Emmanuel Macron and German Chancellor Friedrich Merz, leaders of the bloc's two biggest powers, urged the EU on Tuesday to prepare a "credible instrument" that could be triggered quickly to retaliate against countries that cause economic harm to the bloc.
The new measure would not target any specific country. German officials said the EU needs a powerful tool equivalent to the Section 301 tariffs imposed by the United States or China's restrictions on critical mineral exports.
The proposed weapon — to be discussed at a summit of EU leaders next week — would give the European Commission the power to respond to a trade aggression within days.
China responded to the letter by urging Paris and Berlin to steer clear of "protectionist" measures.
"We hope France and Germany, as major economies in the world, will uphold openness, cooperation and free trade," China's Commerce Ministry said in a statement.
"They should avoid going down the wrong path in the wrong way, and end up bearing the consequences themselves."
G20 finance leaders, with the exception of China, agreed in September to act against "non-market" distortions that exacerbate imbalances. Beijing argues that inflating issues such as economic imbalances and overcapacity is a form of protectionism aimed at pressuring and containing China.
Trade talks under way
EU and Chinese officials have been discussing trade imbalances since June. Sefcovic said he wants "concrete results before October" as well as a number of commitments he can present to EU leaders at their meeting in Brussels.
Trade relations with China top the agenda of next week's summit, amid rising debt that has prompted auditors to warn about the EU's next seven-year budget and sparked protests in France.
European Commission President Ursula von der Leyen told the European Parliament last month that the trade imbalance had reached a tipping point and that Europe would use every tool at its disposal to rebalance the relationship.
