The EU’s relationship with China has travelled a considerable distance in a short time. In 2019, the European Commission described China simultaneously as a “cooperation partner,” a “negotiating partner,” a “economic competitor” and a “systemic rival” — a formulation that was notable for its candour and its contradiction. Since then, the balance among those four characterisations has shifted measurably. China is still all four of those things. But the systemic rival dimension has grown in weight, and the cooperation and partnership dimensions have been tested by disputes that neither side has managed cleanly.
The dependency map
Europe’s economic exposure to China runs in both directions. The EU exports machinery, vehicles, pharmaceuticals and luxury goods to China — markets that matter significantly to Germany, France and Italy in particular. China exports manufactured goods, electronics, solar panels, batteries and critical raw materials to Europe at a scale and cost that European producers cannot currently match. The dependency on Chinese-manufactured clean energy technology is particularly acute: as documented in our country-by-country renewables analysis, the solar panels driving Europe’s energy transition are overwhelmingly Chinese-manufactured, and European attempts to build domestic production capacity remain nascent.
Critical mineral dependency adds another dimension. China controls the processing of a substantial share of the rare earth elements and battery minerals that European electric vehicle and defence industries require. This strategic chokepoint — not the production of the minerals but their processing — has concentrated minds in Brussels in ways that the pandemic-era supply chain disruptions initially catalysed.
The EV tariff dispute
The most visible recent friction point has been the EU’s decision to impose additional tariffs on Chinese-made electric vehicles, announced in 2024 and implemented despite fierce opposition from German automakers who feared Chinese retaliation against their own sales in China. The tariffs followed an anti-subsidy investigation that found Chinese EV manufacturers had received state support at a scale that constituted unfair competition under WTO rules. China imposed retaliatory tariffs on European pork, dairy and spirits, directly targeting the export interests of France and Denmark — a reminder that economic coercion works in both directions.
The dispute illustrates the core tension in EU-China trade policy: European industries that compete with Chinese manufacturers want protection, while European industries that sell into China fear retaliation. Germany’s automotive sector — the most exposed to both risks simultaneously — has been among the most vocal critics of the tariff approach, while its own competitiveness versus cheaper Chinese EVs remains an existential challenge.
The de-risking consensus
The EU’s official policy framework has shifted from “decoupling” — reducing economic interdependence broadly — to “de-risking”: reducing dependency in strategically sensitive areas while maintaining broader trade relationships. Commission President von der Leyen has explicitly endorsed this language, and it represents a genuine middle path between the maximalist positions of cutting all sensitive economic ties with China (economically disruptive and geopolitically counterproductive) and maintaining all existing dependencies regardless of strategic risk (increasingly indefensible given China’s foreign policy direction). Whether de-risking can be implemented at sufficient scale and speed to reduce genuine vulnerability — in critical minerals, semiconductors, clean energy technology — before a serious crisis tests European resilience is the central unanswered question of EU-China policy in 2026.
