EU–China trade talks concluded in Beijing on 9 October, with China’s Commerce Minister, Wang Wentao, and EU Trade Commissioner, Maroš Šefčovič, issuing a joint statement and a 16-point consensus list.
At the start of this week, I believed the EU and China were heading towards a full-scale trade war. Yet without the words ‘Donald’ and ‘Trump’ at the centre of the story, it has attracted far less global attention than the stakes deserve, including the huge implications for British businesses.
Beijing appeared unwilling to shift and Europe unable to back down. In their joint letter to the European Commission, France and Germany called for faster trade defences, reduced dependence on critical supplies and a new mechanism to restrict access to the European market. These proposals still require EU agreement, but the political message was that Europe’s two largest economies were demanding much stronger trade defences against China.
Britain risked being drawn into that confrontation through its renewed ambition for closer EU ties, and it still could. News this week suggested UK ministers were preparing additional duties on Chinese electric vehicles, partly to avoid British manufacturers being excluded from the EU’s “Made in Europe” plans. That remains an unconfirmed policy direction, but it shows how decisions in Brussels and Beijing can narrow the UK’s choices.
That makes the news from Beijing welcome. As EU Trade Commissioner Maroš Šefčovič said: “This is the first time that China has accepted to moderate its exports without going through the phase of prior trade tensions.”
The automotive industry was the central battleground, Europe’s determination to protect jobs and production was colliding with the rapid expansion of Chinese EV exports. This was literally the test case for Europe’s wider response to China’s industrial strength.
Following two days of talks with Wentao, Šefčovič announced an understanding to moderate Chinese hybrid and plug-in hybrid vehicle exports to the EU. These vehicles fall outside the additional duties already imposed on Chinese battery-electric cars. He said the agreement could reduce shipments by more than half against projected volumes over four years. This is a big deal but there are two crucials facts to keep in mind. The first is that the deal is not finalised and the second is the reduction is measured against forecasts. That means that actual exports could still increase.
The EU also reported progress towards lower Chinese tariffs on selected goods, including car parts, olive oil and footwear. Negotiations over the separate battery-electric vehicle dispute will continue.
The rare-earth wording deserves especially careful reading. China says it is willing to “continue” facilitating export licences for rare earths and permanent magnets through the existing green channel. The EU will also continue efforts to resolve individual dual-use export licensing cases involving China. More predictable supplies would benefit European manufacturers and their UK suppliers, faster approvals leave the underlying dependence and Beijing’s licensing leverage, intact.
EU leaders will review trade relations with China at next week’s European Council and ministers from both sides are scheduled to meet by video in January, ahead of a third round of negotiations in March 2027.
My reading is that Beijing has chosen to contain this confrontation… for now. Earlier in the week, I really doubted it would. Its carefully chosen language offers enough reassurance to keep Europe at the negotiating table but now the EU will have to have patience to give diplomacy a chance.
Any push for tougher action risks being portrayed as abandoning talks before they have run their course, very smart diplomacy from China. Trump has demonstrated the pressure Washington could exert through tariffs. China now has formidable leverage of its own through control over critical mineral supplies, but how Beijing uses that power matters, especially now.
If it wants to present itself as a more predictable trading partner than an increasingly abrasive Washington, weaponising essential supplies would undermine that claim. Other countries are watching and drawing their own conclusions about dependence on China. Aggressive tactics may secure concessions in one negotiation while damaging commercial confidence and diplomatic trust across several markets. Those costs can last well beyond the dispute.
There is another challenge Europe and the UK must confront that these trade talks alone cannot resolve, some of China’s export surge reflects European companies’ own commercial decisions. Manufacturers use Chinese factories to serve global markets and invest in China’s research, technology and supplier networks. For those businesses, this can mean lower costs, faster development and stronger shareholder returns. For governments, the same decisions can deepen dependencies or weaken domestic capabilities. A growing concern for the West is that National economic security and corporate interests do not always align. A European brand does not necessarily mean European production, or decisions guided by Europe’s strategic priorities.
For Britain, this week’s Kensington Treaty ratification with Germany reinforces the direction towards closer European cooperation. Meaningful participation in “Made in Europe” could help British products qualify for procurement and industrial incentives while keeping UK suppliers embedded in European manufacturing. As the BCC has argued, excluding British capability would weaken the shared resilience both sides want to build.
So here is the part governments rarely like saying out loud ‘closer alignment comes with trade-offs’. Britain’s participation in “Made in Europe”, and the conditions attached, still need to be secured. Aligning more closely on trade defences, sourcing requirements or investment restrictions could limit Britain’s options with China, and expose individual sectors to pressure. This could make the future services agreement harder to secure.
The UK government must be honest about what businesses stand to gain, what they may have to give up and who bears the cost. These are political choices with real commercial consequences. If we make them, we need to own them.
The EU talks must also be a wake-up call on competitiveness. Trade defences and export controls can buy time, but they are not a substitute for global competitiveness. That comes from affordable energy, faster investment, innovation or alternative processing capacity. Diversification takes years; disruption can arrive in days. And that is still within Beijing’s gift.
Businesses need finance, long-term purchasing commitments and practical contingency plans, alongside a predictable framework for continued engagement with China.
Sometimes successful diplomacy gives neither side everything it wants. These talks fall into that category. They have bought time. Britain and Europe must now use it; to strengthen competitiveness, build resilience and give businesses greater certainty. That is easier said than done especially when Beijing can play the long game, while governments in Britain and Europe face pressure to deliver quick political results.