EU faces €1B per day trade deficit with China
What's the story
The European Union (EU) is facing an unprecedented trade deficit with China, hitting a staggering €1 billion per day. The data, released by Eurostat, shows that the gap between imports from and exports to China stood at €31.9 billion in April alone. The alarming figures have raised concerns about the future of Europe's industrial sector and its reliance on Chinese goods.
Upcoming discussions
European leaders to discuss strategies for tackling trade deficit
European leaders are set to meet on Thursday to discuss strategies for tackling the widening trade deficit. The talks will focus on the growing presence of Chinese electric cars in Europe, a result of a heavily subsidized industry, and the use of common components in factories across the bloc. Trade expert Rafael Jimenez Buendia, a senior fellow at the Mercator Institute for China Studies, predicts that May and June's data will likely show an even larger deficit.
Industry concerns
Potential risks to defense industries
Alexander Julius, President of Eurometal, a trade organization for steel product buyers, has warned EU leaders about the threat posed by China to factories across Europe. He said that relying on China could lead to it dictating what parts would be available and at what price. This situation could be especially difficult for defense industries in Europe.
Trade surplus concerns
Fears of 'China Shock 2.0'
China's growing trade surplus with the EU has sparked fears of a "China Shock 2.0," similar to what the US experienced after Beijing joined the World Trade Organization over two decades ago. The European Commission is said to have considered various measures, including tariffs and quotas on imports of Chinese chemicals and hybrid cars, as possible solutions to address this issue.
Trade defense
Beijing denies allegations of unfairly subsidizing exporters
In response to the EU's concerns, Beijing has denied allegations of unfairly subsidizing its exporters and has insisted that it "never deliberately pursued a trade surplus." The Chinese government also claims that a large portion of the surplus comes from EU companies producing goods in China for re-export to the bloc.