As trade deficit mounts, is EU offering China what it wants to buy?
Traditional European exports like cars are losing their appeal, while restrictions crimp sales of sought-after lithography machines
Facing an ever-increasing trade deficit with China, Europe has limited options to balance the situation in the short term even though it still holds an edge in key sectors including pharmaceuticals, machinery and components, analysts said.
A lot of China’s redirected exports went to the European Union, adding to pressure following a €305 billion (US$357.9 billion) trade deficit with China last year – before Trump launched his tariff war.
“The trade imbalances will get much, much, much worse,” said Jacob Gunter, lead analyst for economic research at the Mercator Institute for China Studies, a think tank based in Berlin.
Europe could still sell commodities, agricultural products or services to China, but its traditional strength in manufactured goods exports had diminished rapidly, Gunter said.
China’s record global trade surplus made headlines across Europe and sparked a new round of warnings from politicians.
French President Emmanuel Macron reiterated the urgent need for Europe to rebalance its trade with China in an opinion piece published in the Financial Times on Tuesday, calling the situation unsustainable for both sides and urging Beijing to boost domestic consumption, among other measures.