EU Confronts Record Trade Deficit with China Amid Fears of a Second China Shock

The EU entered 2025 with a historic goods-trade deficit of €360 billion with China—about €1 billion per day—according to Eurostat and EU officials, prompting urgent policy discussions at the G7 summit.

EU recorded a record trade deficit with China of 360 billion euros - von der Leyen

China’s 2001 WTO entry sparked the first “China Shock,” displacing low-cost manufacturing in the United States. A second wave now sees Chinese high-tech exports—electric vehicles, solar panels, batteries—competing directly with advanced European industries, reviving concerns about industrial decline.

Associated PressGlobal Times

EU-China goods deficit reached €360 bn in 2025 (?€1 bn per day). EU imports from China rose 16.4 % (Jan-May 2026) while German-China shipments grew 17.3 % YoY. Chinese exports to the U.S. fell 37 % (Jan-Apr 2026).

The Guardian

Key actors include EU Commission President Ursula von der Leyen, Trade Commissioner Maroš Šefcovic, French President Emmanuel Macron, Eurometal head Alexander Julius, economists Maurice Obstfeld and Wendy Cutler, and Chinese Vice-Minister Ling Ji.

EU recorded a record trade deficit with China of 360 billion euros - von der Leyen

The deficit threatens Europe’s “industrial backbone,” risking job losses in machinery, automotive and chemicals while Chinese low-cost components support the EU’s green-energy transition, creating a policy tension between supply-chain security and competitive fairness and long-term industrial resilience.

Global Times

Von der Leyen called the €360 billion gap “unsustainable” and stressed a “de-risk, not decouple” approach. Šefcovic said the deficit “must be addressed” as the Commission evaluates tariffs, quotas and sector-specific measures. Macron warned Chinese exports are “literally killing a large part of the European industry.”

EU recorded a record trade deficit with China of 360 billion euros - von der Leyen

Industry leader Alexander Julius argues EU policies “are going in completely the wrong direction,” claiming Chinese imports “destroy the industrial backbone of Europe.”

The Guardian

Eurostat reports a daily €1 billion shortfall, while the Commission cites a cumulative €360 billion deficit for 2025, and Chinese officials attribute part of the surplus to EU-owned factories in China, a factor absent from EU data.

Global Times

• “We are really suffering so much, and the politicians are going in completely the wrong direction, and they don’t realise how much the Chinese are destroying the industrial backbone of Europe,” — Alexander Julius, President, Eurometal

The Guardian

• “China’s export surge, unless its leaders rein it in, will provoke a protectionist wave against Chinese imports worldwide,’’ said Maurice Obstfeld, senior fellow at the Peterson Institute for International Economics and former chief economist at the International Monetary Fund.” — Maurice Obstfeld, senior fellow, Peterson Institute for International Economics

Associated Press

• “Beijing has been relying on the rest of the world to address its overcapacity problem,” — Wendy Cutler, former U.S. trade negotiator, Asia Society Policy Institute

Associated Press

• “never deliberately pursued a trade surplus” — Xinhua News Agency

The Guardian

The G7 summit will consider coordinated tariffs, quotas and a broader de-risking framework, while Beijing has signaled possible counter-measures.

The Straits Times