EU Commissioner Calls China Trade Rebalancing 'Existential' as October Deadline Nears

Since Ursula von der Leyen told the European Parliament on September 16 that the EU-China trade deficit had reached a "tipping point," Brussels has escalated its rhetoric fast. EU Industry Commissioner Stéphane Séjourné told Euronews on Wednesday, September 23, that rebalancing trade with China has become "existential" for Europe, warning the bloc is losing thousands of industrial jobs every week.

Séjourné said the EU lost 250,000 industrial jobs last year alone, concentrated in energy-intensive sectors and automotive supply chains. "This imbalance isn't sustainable, not for China or for the EU," he told Euronews, adding that "trade defence tools are on the table" if Beijing doesn't move.

The numbers back up the alarm. According to customs data cited by Euronews, the EU's trade deficit with China ran at more than €1 billion a day in July. The annual goods deficit hit approximately €360 billion in 2025, up from €291-296 billion in 2023, with the second quarter of 2026 posting a €103 billion gap, the widest quarterly shortfall since the third quarter of 2022.

Von der Leyen set the tone first

Von der Leyen's September 16 State of the Union address, reported by both the Epoch Times and NTD, framed the situation in blunt terms. "Some say the second China shock is looming. But it's already here," she told lawmakers in Strasbourg. "It leads to de-industrialization in the industrial heartlands of Europe. This is unsustainable."

She also flagged a dependency problem that cuts the other way: the EU relies on China for more than 80% of critical raw materials and 90% of rare earths, according to her remarks. Von der Leyen said the EU will "establish a new European corporation on critical raw materials" to build reserves for EVs, semiconductors, batteries and defense production.

That dependency is exactly why Brussels is moving carefully. As Séjourné acknowledged to Euronews, Chinese retaliation could mean restricting the rare earth exports the EU's defense and auto industries can't yet replace. The EU wants leverage against Beijing without triggering a supply shock it can't absorb.

The October deadline

EU Trade Commissioner Maroš Šefčovič held a call with his Chinese counterpart, Wang Wentao, according to a statement from European Commission spokesman Olof Gill reported by Insurance Journal. Gill said "genuine engagement remains a priority," but stressed that "first concrete outcomes" need to show up at a Beijing meeting Šefčovič will chair on October 8 and 9. "That will signal that we are moving from rhetoric to results," Gill said.

Šefčovič told reporters he wants "clear indications that negotiations are leading toward a positive outcome" when he arrives in Beijing, with discussions covering export management, EU market access in China, and rare earth controls. EU leaders are also set to meet in mid-October to weigh new retaliatory instruments.

So far, Beijing has resisted Brussels' push for voluntary export curbs, according to Euronews. China's own economic pressures cut both ways here. Von der Leyen argued that Beijing's weaker domestic demand means it needs the European market just as much as Europe needs to sell there, framing rebalancing as mutual interest rather than a one-sided demand.

Pascal Lamy, the former World Trade Organization Director-General who helped design the EU's trade architecture, argues the middle ground is gone. Lamy said in September that Europe faces a binary choice: force Beijing into macroeconomic rebalancing or accept broad protectionism. There's no comfortable third option left.

Lamy's case rests partly on the fact that the EU's existing tools haven't worked. The EU already runs countervailing duties on Chinese electric vehicles ranging from 17.8% to 45.3%, plus roughly 80 separate steel trade-defense measures. None of that has closed the deficit, which ties to Chinese manufacturing overcapacity running at approximately 76% utilization—more supply than China's own market or exports elsewhere can absorb.

A generalized tariff around 30% on Chinese imports has surfaced in European commentary as a tail-risk option, though nothing close to that has been formally proposed by the Commission. Critics of that path would note it risks colliding with the EU's own climate targets, since cheap Chinese solar panels, batteries and EVs have been central to Europe's decarbonization plans. Broad tariffs would raise costs for European manufacturers and consumers buying those goods, a real tradeoff that supporters of a harder line have yet to fully answer.

Whether Beijing makes any concrete concession before Šefčovič sits down in Beijing on October 8 and 9 remains to be seen. If it doesn't, EU leaders meeting in mid-October will be deciding not whether to act, but which tools to pull first.