The European Commission said on Friday that the European Union's trade and investment relationship with China is unsustainable, following internal discussions among commissioners about how to protect European industries from a surge in Chinese imports.
Those talks came ahead of an EU leaders' summit set for June 18 to 19. Officials are weighing several possible measures, including requirements for EU companies to diversify their supply chains and new trade instruments designed to curb Chinese access to the EU market in targeted sectors such as chemicals, metals and clean energy technology.
In a statement, the Commission noted: "As economic and security interests become ever more intertwined, both dimensions will require a more robust and coherent response." The statement framed economic and security considerations as linked drivers for any future policy changes.
Commissioners did not present finalized measures on Friday. Brussels expects to put forward concrete proposals in the third quarter of this year, according to the discussions described by officials.
The move forms part of a broader effort among Western governments to reverse decades of offshoring production to China - a trend that peaked in the early 2000s and is credited with contributing to the erosion of industrial know-how and manufacturing capacity in the United States and among EU member states. Policymakers are examining steps to rebuild resilience and reduce strategic dependencies.
At the same time, the Group of Seven wealthy nations has scheduled a mid-June summit that will address trade imbalances and overcapacity, as concerns grow over China's expanding role in supplying rare earths and other metals viewed as essential for defense, technology, energy and automotive supply chains.
Brussels has already taken selective action to limit certain Chinese imports, with mixed results. The European Union imposed tariffs on electric vehicles it deemed heavily subsidized by Chinese producers, while excluding hybrid vehicles from those measures. Hybrid models have accounted for nearly 40% of new car registrations so far this year, and China's market share in Europe continues to grow.
Implications
The Commission's assessment signals a potential shift toward more interventionist trade policy to protect strategic industrial sectors. Officials appear focused on balancing market access with steps intended to preserve European capacity in chemicals, metals, clean energy technology and automotive manufacturing.