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China-EU relations
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Yan Shaohua
Opinion
Yan Shaohua

EU and China need a grand bargain to avoid a trade war

A mutually beneficial pact must acknowledge a new economic reality and more fully tap the potential for two-way investment

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German Chancellor Friedrich Merz (right) and European Council president António Costa attend a European Council summit in Brussels on June 19. Photo: dpa
Yan Shaohua
Yan Shaohua is an associate professor and deputy director of the Centre for China-Europe Relations at Fudan University.
As European leaders convened at the European Council meeting in Brussels this month, the spectre of a full-blown trade war with China cast a long shadow over the proceedings. Amid ongoing anti-subsidy probes into Chinese green technology and the looming threat of retaliatory tariffs, the economic bedrock of the China-EU relationship appears increasingly fragile.

Yet, beneath the hawkish political rhetoric, recent high-level meetings between European officials and their Chinese counterparts underscore a mutual desire to avoid a zero-sum confrontation.

To pull back from the brink, Brussels and Beijing must look beyond short-term political posturing. Avoiding a mutually destructive trade war requires action on three vital fronts: exercising strategic patience, acknowledging a new economic reality through a grand bargain, and pivoting towards investment as a viable rebalancing tool.

First and foremost, both sides must exercise strategic patience. The EU’s goods trade deficit with China, which exceeds €300 billion (US$342.76 billion), has become a convenient political flashpoint.

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