Brussels and Berlin are preparing for a critical period in EU-China relations, with key developments expected to shape trade policy for years ahead. The European Union is focused on addressing perceived unfair trade practices by China, amid concerns over a widening trade deficit and the impact on Europe's manufacturing base.

EU trade chief Maros Sefcovic is scheduled to visit Beijing on October 8 and 9 to meet with Chinese Commerce Minister Wang Wentao. The discussions will seek to evaluate progress since a confrontation between the two sides in June, particularly regarding China’s export volumes of certain goods, including plug-in hybrid electric vehicles. The European Commission is pushing Beijing to agree to voluntary export limits to slow the surge in Chinese imports that has coincided with weaker EU exports to China.

While officials described talks as advancing more positively than expected, China has publicly dismissed proposals to cap shipments. The outcome of this meeting will inform the agenda for an EU leaders’ summit in Brussels the following week, where the Commission plans to present its findings and seek authorization to introduce new trade tools by early December.

Although China is not anticipated to be explicitly named in the written conclusions of the European Council summit, EU officials indicate that decisive action is likely to proceed regardless of the October discussions. One official remarked that the momentum for tougher measures remains unchanged.

There is growing alarm within Europe, particularly in Germany and across central and eastern European countries, about deindustrialization linked to Chinese trade practices. German positions have notably hardened, reflecting a shift away from engagement toward greater protectionism. Critics warn of factory closures and employment losses, intensifying political pressure on Chancellor Friedrich Merz, especially given the electoral rise of the far-right Alternative for Germany.

Among the proposed measures is a diversification instrument requiring companies in key sectors to source from multiple suppliers across different countries, aimed at reducing dependence on China. Another initiative under consideration is a solidarity fund to support European firms affected by retaliatory actions from China or other trade partners.

Reports have also emerged about a potential new trade defense mechanism, modeled on the United States’ Section 301 power, granting the European Commission broad authority to impose tariffs or restrictions swiftly when systemic import dependency or overcapacity thresholds are exceeded. This proposal, reportedly drafted by France and Germany, would involve updating a long-dormant anti-coercion instrument designed to offer rapid retaliatory options while maintaining a high activation threshold.

The China Chamber of Commerce to the EU criticized such a tool, cautioning that it could lead to a “weaponization” of trade policy and undermine multilateral trade rules. It urged the EU to avoid unilateral measures that could provoke retaliation and destabilize global trade.

German industry groups have begun to adopt a more protectionist stance in response to these challenges. The Federation of German Industries (BDI), previously supportive of closer ties with China, now advocates for measured defensive actions despite risks of Chinese countermeasures, emphasizing the long-term costs of inaction. While the BDI prefers WTO-compliant solutions, it acknowledges the need for flexibility given China’s substantial state-driven overcapacity and argues that traditional trade remedies often act too slowly.

Similarly, the German Association of the Automotive Industry (VDA), once a vocal opponent of restrictive trade policies targeting China, appears to have softened its position. An internal VDA document reportedly recognizes trade imbalances with China and suggests that trade defense instruments could be justified in cases of proven unfair competition.

Observers note that Germany’s stance has evolved significantly since earlier in the year, when Berlin blocked EU tariff measures on electric vehicles. This shift reflects broader European concerns over China’s aggressive industrial policies and a willingness to consider stronger responses to protect European industry.