Standoff over bilateral trade deficits

European Union Trade Commissioner Maroš Šefčovič arrived in Beijing on Thursday, 8 October 2026, to open two days of trade negotiations with Chinese Commerce Minister Wang Wentao. The meetings follow an October deadline set earlier in the year by Brussels for China to address a bilateral trade deficit of 360 billion euros ($410 billion). Since 2025, that deficit has averaged roughly 1 billion euros, or more than $1 billion, per day. European policymakers point to extensive Chinese state subsidies across manufacturing sectors, including electric and hybrid vehicles, solar panels, batteries, and steel. Šefčovič met European business leaders in Beijing on Thursday morning, stating that European firms require improved market access in China to correct what Brussels describes as an unsustainable commercial imbalance.

Disagreements over hybrid vehicle export limits

The automotive sector forms the immediate friction point between the two economies. Beijing rejected a European Union proposal requesting a voluntary export ceiling that would cap Chinese hybrid vehicle imports at approximately 15% of the European market. Chinese hybrid models currently account for more than one-third of European sales in that category, driven by brands such as BYD, MG, and Chery. European officials informed member states of China's refusal on Wednesday. The European Commission is now evaluating unilateral temporary safeguard measures to restrict hybrid imports without Beijing's agreement.

Under the safeguard mechanism being considered, the Commission would establish import quotas, applying higher supplemental tariffs to any vehicles brought into the bloc beyond those thresholds. To comply with trade law, identical quota systems would need to extend to other automotive trading partners, including the United Kingdom, South Korea, and Japan, based on past export volumes. European car manufacturers, including Volkswagen, have reported factory layoffs and declining sales in China as subsidized Chinese manufacturers increase their domestic and international market share.

Franco-German pressure and parliamentary action

The visit follows coordinated actions across European institutions earlier in the week. On Monday, French President Emmanuel Macron and German political leader Friedrich Merz sent a joint letter to the European Commission. The letter urged Brussels to establish emergency procedures to exclude Chinese firms from the internal market and advocated lowering procedural barriers to activate the Anti-Coercion Instrument, a regulatory mechanism allowing the EU to restrict trade and investment from foreign countries. In February, France's High Commission for Strategy and Planning had also recommended 30% tariffs on numerous Chinese exports and a currency devaluation of the euro against the yuan.

Legislative pressure intensified on Wednesday when the European Parliament approved a resolution demanding economic reciprocity from Beijing. The vote concluded with 454 members voting in favour and 86 against, following a plenary debate held Tuesday in Strasbourg. Lawmakers insisted on proportionate countermeasures if China does not grant equal market conditions. Ahead of the vote, Belgian lawmaker Hilde Vautmans, who spearheaded the resolution, urged European institutions to leverage their commercial standing.

Europe has economic power, it's time we used it.

Trade officials in Brussels had already introduced restrictions on Chinese steel imports and e-commerce small parcels, but broader measures will depend on negotiations in Beijing.