EU and China face trade tensions amid concerns over market sustainability

The European Commission declared on Friday that the current trade and investment relationship with China is unsustainable, emphasizing that economic interests are increasingly tied to security. While maintaining that its approach is one of de-risking rather than decoupling, the EU is developing a more robust response to address unfair trade practices. In response, China has hinted at potential retaliatory investigations into EU trade sectors, citing concerns over supply chain security and discrimination. Brussels is currently considering new tools to manage industrial overcapacity, targeting sectors like electric vehicles, steel, and solar panels that benefit from heavy state subsidies. Five member states, including France, Spain, and the Netherlands, have urged the Commission to intensify these investigations. The discussions are part of preparations for the upcoming June European Council and G7 meetings. European Commissioner Stephane Sejourne has advocated for a more systematic use of existing duties and quotas. Meanwhile, the EU continues to seek alternative mineral supplies through its RESourceEU initiative to diversify its supply chains.