China-EU trade jumps as Beijing redirects exports and Brussels hardens industrial policy

Trade between China and the European Union rose sharply in the first two months of 2026, underlining how global trade flows are being reshaped by renewed geopolitical tension, American tariff pressure and Europe’s own unease about industrial dependence.

According to China’s General Administration of Customs, bilateral goods trade with the EU reached 998.94 billion yuan in January and February, up 19.9 per cent year on year. That outpaced the growth of China’s overall goods trade, which rose 18.3 per cent to 7.73 trillion yuan over the same period. Chinese exports increased 19.2 per cent and imports 17.1 per cent.

The figures matter because they suggest that Europe is absorbing a larger share of Chinese trade at a moment when commerce between China and the United States remains under strain. China’s trade with the US fell 16.9 per cent in the same January-February period, to 609.71 billion yuan, according to the Chinese customs data. Reuters has also reportedthat Washington has reopened unfair-trade investigations and is seeking to rebuild tariff pressure, even after periods of tactical de-escalation. The effect is to keep Beijing looking for alternative markets, and Europe remains the largest wealthy consumer market outside the United States.

That shift does not mean relations between Brussels and Beijing are straightforward. The EU’s trade deficit with China remains large. The bloc’s goods trade deficit with China reached €359 billion in 2025, a level European Trade Commissioner Maroš Šefčovič described as unsustainable. The European Commission’s own trade page shows the deficit at €305.8 billion in 2024, after €297 billion in 2023 and a record €397.3 billion in 2022. The direction of travel is clear: even where trade is growing, the imbalance remains politically difficult inside Europe.

This is the context in which a series of high-level European visits to China has taken place. British Prime Minister Keir Starmer travelled to China in late January on the first visit by a British leader in eight years. The UK government said the trip secured £2.2 billion in export deals, around £2.3 billion in market access gains over five years and a reduction in China’s whisky tariff from 10 per cent to 5 per cent. Reuters described the visit as part of a broader effort to repair ties with China while Britain navigates a less predictable relationship with Washington.

Germany has followed a similar path, though from a different industrial starting point. Chancellor Friedrich Merz visited Beijing in February for his first trip to China in office, accompanied by senior business leaders from major German companies. Merz argued for partnership and dialogue, while also warning that the widening trade deficit was “not healthy” and pressing the case for more balanced economic relations.

The most contentious area remains electric vehicles and wider manufacturing competition. The EU imposed anti-subsidy tariffs on Chinese-built EVs in 2024, and negotiations have since continued over possible alternatives based on minimum prices and other conditions. Reuters reported in January that Brussels had set firm terms under which Chinese manufacturers might avoid some tariffs, while maintaining the principle that Europe’s car industry should not be exposed to what it sees as state-backed overcapacity. At the same time, Chinese manufacturers continue to expand in Europe, from passenger cars to freight trucks, suggesting that tariff friction has not stopped the broader commercial push.

Brussels is therefore trying to combine market openness with a more defensive industrial strategy. On 4 March, the European Commission presented its proposed Industrial Accelerator Act, designed to support European manufacturing through “Made in EU” and low-carbon requirements in strategic sectors including steel, cement, aluminium, wind turbines, electrolysers and electric vehicles. The proposal is intended to strengthen the EU industrial base and reduce reliance on foreign suppliers, particularly where China dominates global production capacity.

The result is a more complex trade relationship than the headline growth figure alone suggests. China is selling more into Europe because the US market is harder to access and because European demand remains deep. Europe, meanwhile, still wants access to China’s market and to Chinese investment, but no longer appears willing to accept ever-rising dependence as a neutral outcome. The increase in trade is real. So is the political effort in Brussels to shape, screen and in some sectors restrain it. In that sense, the nearly 20 per cent rise in China-EU trade is less a sign of strategic convergence than evidence of a larger redistribution of global commerce under pressure.

Source: EU Today