By Jasurbek Khamrakulov, Undergraduate student at UWED, intern at IAIS
Background
In recent years, the relations between Europe and China have entered an increasingly complex and controversial phase. While the European Union is determined to engage with China in open dialogue and cooperate on common challenges, including the climate challenge, it has raised serious concerns over trade imbalances, supply chain vulnerabilities and technological competition.
The EU identifies China simultaneously as a “partner, competitor, and systemic rival,” an expression first introduced in its 2019 strategic outlook and reaffirmed by EU member states in 2023. China remains one of the EU’s largest trading partners, with bilateral trade in goods reaching €732 billion in 2024. However, the EU has run trade deficit with China for decades. It amounted €359.9 billion in 2025 and surpassed the €312.2 billion deficit of 2024. China became the EU's fourth-largest partner for exports and remains its biggest for imports. Chinese companies exported the goods to Europe with the value of €559.5 billion. Besides, EU imports of manufactured goods made up 97.3% of total imports from China. The most imported manufactured goods were machinery(54.4%), other manufactured goods (33%) and chemicals (9.8%).
De-risking strategy
Therefore, the central theme of current EU policy has become “de-risking” strategy. The term was introduced in the strategy of European Commission President Ursula von der Leyen during her first mandate. She emphasized the need to mitigate of dependencies on China, particularly in areas of high tech and dual-use goods. Even under the pressure of the American worldwide tariffs imposed by the Trump’s administration in 2025, von der Leyen viewed Europe and China as two of the world's largest markets, designed to support reformed free trading system, thereby rejecting Trump’s demands for decoupling from China.
Eventually, the situation in the rare earth market intensified after China expanded export controlson several strategic minerals, such as lithium, cobalt, and rare earth minerals, which are essential for electric vehicles, renewable energy technologies, semiconductors, and defense industries. This exposed Europe’s vulnerability in global supply chains. Brussels responded by introducing “economic security doctrine” and initiating new measures focused on stockpiling, recycling, joint purchasing, and diversifying imports through partnerships with alternative suppliers. An important step was taken with the EU and the United States have signing a new strategic partnership on critical minerals aimed to reduce Western dependence on China. The agreement, signed by EU Trade Commissioner Maroš Šefčovič and U.S. Secretary of State Marco Rubio, includes coordination on mining, refining, recycling, stockpiling, and trade policies related to critical raw materials.
In this context, the de-risking strategy is clearly seen in European Union’s accelerated efforts to reduce its dependence on China for critical raw materials. These initiatives build upon the EU’s Critical Raw Materials Act, which aims to ensure that no more than 65% of a strategic raw material comes from a single external source. Moreover, the core elements of the new doctrine included improving coordination among member states and accelerating the use of anti-dumping and anti-subsidy measures. Initiatives such as “RESourceEU” were prioritized to strengthen domestic industrial capacity in sectors like batteries, AI, defense, and semiconductors.
However, one of the major obstacles facing Europe’s approach comes down to the lack of funding, domestic mining capacity and processing infrastructure to compete with Chinese companies. Maintaining the approach would require greater use of financing from the European Investment Bank for funding and to the EU's Global Gateway plan, its own version of China's Belt and Road scheme.
Despite the hurdles, the EU has maintained additional tariffs on electric vehicles manufactured in China. The tariffs, first introduced in 2024 after an anti-subsidy investigation, can reach up to 35.3% depending on the manufacturer. However, the EU has also demonstrated a pragmatism by allowing individual companies to negotiate tariff exemptions through minimum-price agreements and import quotas. In February 2026, the European Commission approved the first such exemption for Volkswagen’s China-made Cupra Tavascan model, showing that Europe seeks to manage economic competition with China rather than choose the path of immediate decoupling.
At the same time, the European Commission recommended the member states exclude of equipment from Huawei and ZTE as part of a broader strategy to strengthen cybersecurity and reduce strategic vulnerabilities linked to “high-risk suppliers” in key sector, such as critical digital infrastructure. The move demonstrates how the European rhetoric is going far beyond trade into the digital security, where technological dependence is now viewed as a geopolitical risk.
This process of securitization is also evident in the EU’s climate policies and protectionism. A major example is the Carbon Border Adjustment Mechanism (CBAM), which entered into force in January and applies carbon pricing to imports of emissions-intensive goods such as steel, aluminium, and cement. Since China is a major exporter of these products, the mechanism creates additional compliance costs and competitive pressure for Chinese firms, while encouraging cleaner production standards.
Geopolitical dimensions
One of the main sensitive obstacles to ease EU-China relations lies in the geopolitical tensions. China’s close relationship with Russia remains a major concern for European policymakers, especially regarding sanctions circumvention. Meanwhile, China’s expanding influence in the Global South, especially in regions rich in critical minerals such as Latin America and Africa, also overlaps with Europe’s own diversification strategies. As a result, European companies are gradually adjusting their business models through supplier diversification, localization strategies, and closer geopolitical risk assessment.
The engagement of the EU with China has long been shaped by the trends and development of Transatlantic relations. Over the last several months, the growing tensions between Europe and the United States have created opportunities for China to re-engage with Europe, but on terms favorable to Beijing. Chinese analysts increasingly interpret Europe’s push for “strategic autonomy” as a sign that the EU may distance itself from Washington and soften its strategy towards China.
However, Europe’s de-risking policies are not simply the result of American pressure, but come from the EU’s own assessment of strategic vulnerabilities linked to Chinese supply chains, state subsidies and technological dependencies. As the pressure from the US rapidly grows, China will likely attempt to exploit transatlantic tensions by offering selective economic incentives and pressure Europe to loosen its economic restrictions.
European and Chinese perceptions
Chinese experts often describe Europe’s policy as an over-securitization of economic relations that damages the EU’s own economic interests. They argue that reducing dependence on Chinese supply chains increases production costs and complicates the continent’s green and digital transitions by limiting access to affordable Chinese technologies and industrial goods. Some media channels even claim that Europe’s de-risking is turning into a form of “de-development”caused by pressure from the United States rather than by Europe’s own economic interests.
From the constructivist perspective, European perceptions of China are becoming extremely complex and contradictory. While many Europeans support reducing economic dependence on China and favor diversifying trade relations, Chinese exports to Europe continue to grow rapidly, especially in major economies such as Germany, France, and Italy. Public opinion reflects a tension between concern over European deindustrialization and consumers’ attraction to affordable Chinese products. These divisions are also geographical, with Southern European countries generally more open to Chinese economic engagement than more industrialized northern states. Many European governments continue pursuing pragmatic engagement with China despite Brussels’ tougher regulatory approach. Ongoing visits by European leaders, including Friedrich Merz’s visit in February are viewed as evidence that many EU member states still value economic cooperation and recognize the importance of Chinese markets.
A harder line on China is gaining momentum inside the European Commission. It is actively exploring the unused Anti-Coercion Instrument (ACI) that would include tariffs, import/export restrictions, bans on public procurement participation, restrictions on intellectual property rights, to counter Chinese economic pressure. A key debate among the 27 Commissioners on the EU’s China strategy is scheduled for 29 May 2026. This shift follows frustration with Beijing’s lack of meaningful concessions despite repeated EU concerns and Chinese retaliation threats over EU legislation such as the “Made in Europe” Industrial Accelerator Act. Despite the Commission’s tougher stance, member states remain divided. Germany’s Chancellor F. Merz has expressed the intention of a long-term trade deal with Beijing. Spain continues to pursue close economic ties, while France and Belgium call for a firmer approach to protect European industries. Activating stronger tools like the ACI would require qualified majority support.
Policy recommendations
Given the potential risks and internal inconsistencies, a key takeaway for the EU should be continuing a balanced and pragmatic de-risking strategy rather than full economic decoupling from China. Firstly, the EU must accelerate the diversification of strategic supply chains. Priority sectors include critical raw materials, semiconductors, batteries, pharmaceuticals, and green technologies. This requires rapidly expanding trade and investment agreements with alternative suppliers in Latin America (particularly MERCOSUR), Africa, and the Indo-Pacific to reduce exposure to geopolitical shocks, export controls, and economic coercion.
Secondly, Europe needs to strengthen its domestic industrial and technological base through targeted industrial policy. The Critical Raw Materials Act, Carbon Border Adjustment Mechanism (CBAM), and green industrial subsidies should be complemented by increased funding for research and development, faster permitting for strategic projects, and infrastructure modernization. While pursuing these goals, the EU must avoid excessive protectionism that could raise consumer costs, slow down innovation, or trigger damaging reactions. Instead, it should rely on precise, WTO-compatible tools such as anti-subsidy measures, investment screening, and cybersecurity standards in high-risk sectors.
Thirdly, the EU should overcome internal fragmentation by developing a more unified and coherent China policy. National differences have too often undermined collective decision-making. Achieving consensus among key member states will significantly enhance the Union’s negotiating position. At the same time, the EU should deepen strategic partnerships with Indo-Pacific democracies, including Japan, South Korea, India, and Australia, in critical minerals, technology standards, digital governance, and maritime security. These partnerships will help reduce over-reliance on China without undermining the free and open trading system.
Ultimately, Europe’s approach toward China is best understood not as a move toward confrontation, but as an attempt to find the proper way in the anarchic international system through pragmatic balancing. The potential success can be only achieved if Europe’s de-risking strategy represents both a response to geopolitical pressures and a long-term effort to reach strategic autonomy in the multipolar order. And that strategic autonomy begins with unity; without it, Europe negotiates with China not as a power, but as a collection of voices.
* The Institute for Advanced International Studies (IAIS) does not take institutional positions on any issues; the views represented herein are those of the author(s) and do not necessarily reflect the views of the IAIS.
