Turning Point in Beijing: Can the European Union Win Concessions from China?

Despite its dependence on China in areas such as rare earth elements, the European Union can take a stronger bargaining position against Beijing's pressure by leveraging its large market.

According to Ambassador Arjan, Modern Diplomacy published a note and wrote: On October 3rd, five days before EU Trade Commissioner Marosh Shefcovic arrived in Beijing, China's Ministry of Commerce started an anti-dumping investigation on "Pnitrotoluene".

This substance is a European intermediate chemical compound that is used in the production of dyes, medicines and pesticides. Few officials in Brussels can even name the companies that produce this substance, and that is exactly what Beijing was aiming for.

This small investigation was a routine operation from the legal point of view and perfectly calculated in terms of timing. With this action, China reminded the European Union, right on the eve of the second meeting of the EU-China Trade and Investment Council on October 8 and 9, that it can open a case against any European economic sector at any time.

In June, Brussels gave China until October to deliver "concrete results". But Beijing's response was clear even before the talks began: China expects Europe to back down.

However, economic calculations show that Beijing has misjudged the cost balance. The European Union leaders, who are going to review the results of the negotiations at the October 15 and 16 meeting in Brussels, should make a decision based on this fact.

The calculations that guide Brussels' policy are clear. In 2025, the European Union exported 199.6 billion euros of goods to China and imported 559.4 billion euros of goods from China; It means a trade deficit of 359.8 billion euros.

Gunnar Wiegand, the former senior official of the Asia department of the European Union's external action service, predicts that this figure will reach around 400 billion euros this year.

The trade gap continues to widen: China's exports to the EU grew by 15.3% in the first eight months of 2026, while EU sales to China increased by only 6.2%.

The negotiations, which began on June 29, pursue three main demands of the European Union: goals such as limiting China's subsidized excess production capacity in the fields of cars, steel and batteries; fairer access for European companies to the Chinese market, including government contracts; Ensuring sustainable access to rare earth elements.

However, the main test case is the automotive industry.

China's plug-in hybrid vehicles exempted from EU tariffs against electric vehicles in 2024; The issue that caused the export of these cars to Europe to increase from about 3,800 units per month in October 2024 to 50,000 units in July 2026.

Brussels wants limits on the process, but Beijing has opposed voluntary restrictions or quotas.

The crisis of rare earth elements has overshadowed all negotiations. China's extensive export controls, which were implemented in October 2025, have only been suspended until November 10, 2026.

The Washington-Beijing trade truce now runs until January 10, 2027, but Europe has not received such an extension.

The European Union supplies about 98% of its rare earth element imports from China; So without a new deal, Brussels will be vulnerable to Beijing's decisions.

Juxtaposing China's actions over the past six months, Beijing's message is clear: Europe is divided and vulnerable, and will eventually settle for dialogue rather than tough action.

In April and July, China banned exports of dual-use goods to 21 European entities in Germany, the Czech Republic, Poland, France, and the Netherlands; This action was the second wave of restrictions and an obvious reaction to the European Union's sanctions against Russia.

Beijing has publicly stated its opposition to export restrictions. It granted Washington exemptions on rare earth elements, but did not grant such concessions to Brussels.

Then, right on the eve of the negotiations, he initiated the anti-dumping investigation on pnitrotoluene; The move was similar to the European Union's investigation into China's polyvinyl chloride (PVC) in September.

Each of these measures alone is too small to justify escalation, but too targeted to have a political message that cannot be ignored.

In sum, all these actions are based on a common assumption: that a fragmented and vulnerable Europe will eventually settle for a minimal agreement; An agreement that might include the creation of a new task force, faster issuance of rare earth element export licenses or an agreement on minimum prices for certain car models.

Of course, this opinion is based on past experiences.

When the European Union imposed tariffs on Chinese electric cars in 2024, Beijing responded by targeting European brandy and pork exports, and Brussels moved toward price agreements instead of strict caps.

Even now, Spain and Slovakia remain the main opponents of tougher measures against China. Spain is also on the eve of elections; An election that the country's pork exporters still remember the consequences of the trade dispute with China.

The common view is that a trade war is a "lose-lose" situation, and Europe, as the more vulnerable party, will suffer more. But this view misjudges where the costs are distributed.

China needs the European market more than ever

China's economy now relies on exports more than ever. In the first eight months of 2026, investment in China's housing sector decreased by 19.9% and infrastructure investment by 7.2%; While industrial production increased by 5.2 percent.

This gap between the amount of China's production and its internal absorption capacity must be moved somewhere.

Considering that US tariffs have limited a large part of this country's market to Chinese goods, Europe has become the main destination of this surplus production; For this reason, China's sales in the European Union market grow by about 15% annually.

Imposing quotas on hybrid cars, creating safeguards for the chemical and machinery industries—temporary import restrictions that the EU could impose within months—and the rapid deployment of countermeasures will target precisely the sectors on which Beijing's economic growth depends.

No other market in the world has the capacity to absorb 560 billion euros of Chinese goods as much as Europe. Transferring these goods to emerging economies will not be without cost. Because these countries will probably react against China's non-competitive policies.

In line with this, G20 financial leaders - without China - agreed in September to tackle "non-market distortions".

Europe's costs are real, but manageable

Europe's vulnerability to China is real, but it is concentrated. Out of a total of 199.6 billion euros of EU exports to China: machinery 45.3 billion euros; electrical equipment 29 billion euros; Cars 16.4 billion euros; Medicines account for 13.6 billion euros.

China's retaliation could hurt German machinery manufacturers, European automakers, and French and Spanish farmers.

But these exports have already had a downward trend; EU exports to China decreased by 6.5% last year.

However, the cost of inaction will be even greater and wider. In this regard, Wiegand warned that the continuation of this process could lead to deindustrialization and job loss; Especially in Germany and the Czech Republic, which are the most vulnerable.

In the past year, the European Commission has initiated 30 commercial investigation cases against China; A figure that is almost three times the usual average. Brussels is no longer pretending that this problem will be solved by itself.

The strongest argument of the opponents of the EU's strict approach is the issue of rare earth elements.

Considering that 98% of Europe's imports come from China, the complete stoppage of the export of these materials can cause problems for European automobile production lines and defense industries within a few weeks.