Your guide to Europe’s China shock trade debate

The EU’s trade relationship with China is changing. European firms are losing ground in China, while Chinese producers are becoming stronger competitors in the EU and on third markets. China’s industrial policies, high investment in manufacturing and weak domestic demand add to the pressure on European industry. The EU needs to weigh the risks of Chinese retaliation against the costs of further industrial decline. This policy brief examines the main drivers of the current trade debate, explains what existing EU trade instruments can achieve and where they reach their limits, and assesses proposals for new instruments. It recommends using and refining the current toolkit, identifying landing zones in negotiations with China, and embedding trade measures in a broader strategy for European growth and competitiveness.