China’s Ministry of Commerce stated on Tuesday that it would “respond firmly” if the European Union imposes new restrictions on Chinese businesses or products. The announcement came ahead of high-level trade talks scheduled for the following week and was issued in response to reports that the EU is considering new measures to address its trade deficit with China.
In its statement, the ministry said that introducing restrictions while trade talks are ongoing would “seriously undermine mutual trust” and “disrupt” the negotiations. The comments were specifically directed at reports that the EU was considering trade tools similar to the United States’ Section 301, which allows for tariffs and other trade restrictions.
The statement from Beijing follows comments made earlier in the week by EU Trade Commissioner Maroš Šefčovič. In an interview with Euronews, Šefčovič said the EU expects “concrete results” from China by October to address the trade imbalance, adding that the bloc could implement “harsher measures” if the deadline is not met. Šefčovič is scheduled to visit Beijing for high-level talks.
Ongoing trade discussions between the two economic partners have taken place throughout the summer. The European Union has stated its goal is to reduce what it describes as a record trade deficit with China.
The reports referenced by China’s ministry align with an analysis published this week by Noah Barkin of the Rhodium Group. Citing European officials, Barkin wrote that Germany and France are finalizing a joint paper that urges the European Commission to accelerate the development of a new trade enforcement tool. According to one official cited in the report, the mechanism could allow the EU “to cut China off from the European market within 24 hours.”
According to China Customs data, the EU’s trade deficit with China is the largest in the world. While the Association of Southeast Asian Nations (ASEAN) surpassed the EU as China’s largest trading partner for goods in 2020, the EU states that it remains China’s top overall trading partner when services are included. The EU reported that combined two-way trade reached 880 billion euros (approximately $948 billion) in the previous year.
