EU and China open three months of talks over €360bn trade deficit

The European Union and China have agreed to three months of formal trade consultations aimed at easing tensions over the bloc's €360bn annual trade deficit. The talks are intended to stabilise a relationship that has been strained by weeks of threats and recriminations. Both sides said they want to make the bilateral relationship more balanced.

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The agreement was reached in Brussels after the EU's trade commissioner, Maroš Šefčovič, met China's commerce minister, Wang Wentao, on Monday. In a joint statement, the two sides said the main objective of the trade and investment consultations is to strengthen dialogue at ministerial level on trade and investment policy. Šefčovič said he hoped the dialogue would produce tangible results before the next meeting in Beijing in October.

The dispute has centred on concerns in Europe that Chinese exports are flooding the bloc and putting pressure on factories and jobs. Eurostat said on 15 June that Chinese exports to the EU exceeded imports from the bloc by €1bn a day. Industry groups in China have warned that the level of exports to Europe could threaten EU factories that rely heavily on components from China.

The consultations will cover trade and investment rebalancing, export controls including those on rare earths, intellectual property rights and World Trade Organization reform. The talks come at a sensitive moment for European policymakers, who have been weighing how to respond to what some officials and industry voices describe as a new wave of competitive pressure from China. The issue is not limited to electric vehicles and green energy, but extends more broadly across industrial supply chains.

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For the EU, the scale of the deficit has made the issue both economic and political, with leaders under pressure to protect manufacturing while avoiding a wider confrontation. The joint statement is notable because it is the first of its kind in seven years, underlining how strained the relationship has become. The consultations are being presented by both sides as a way to keep channels open while addressing specific areas of disagreement.

They also reflect a broader effort to prevent trade disputes from escalating into a more damaging confrontation for businesses on both sides. What remains unclear is whether the three months of talks will produce any concrete changes before the October meeting in Beijing. It is also not yet clear how far either side is prepared to move on export controls, market access or industrial policy.

The coming weeks will show whether the consultations can narrow the gap between the two sides or simply delay a deeper trade dispute.

#EuropeanUnion #China #tradedeficit #MarošŠefčovič #WangWentao

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