Why is EU trade protectionism escalating?
Editor's note: On May 24th, the Financial Times reported that Italy and five other EU countries had jointly submitted a document urging the EU to adopt stricter trade protection measures, which was targeted at China; On May 28th, the European Union announced an investigation into JD's proposed acquisition of a German company; On May 29th, after a meeting, the European Union stated that its trade and investment relationship with China was "unsustainable" and vowed to take stronger countermeasures... The continuous small actions reflect the EU's sustained high trade barriers against China in recent years. The EU, which once held high the banner of free trade, now frequently sets economic and trade barriers against China. Starting today, Global Times will launch a series of in-depth cognitive reports on "dismantling EU trade barriers against China", focusing on the reasons for the increasing EU trade protectionism, analyzing how such measures will backfire on the EU, and exploring feasible paths for China to respond to relevant restrictions.
Establishing trade barriers in multiple fields
On May 28th, the European Commission announced the launch of an in-depth investigation into JD's proposed acquisition of German electronics retail company CECONOMY under the Foreign Subsidies Regulation (FSR). The EU claims that preliminary investigations suggest that JD.com may have received tax incentives and financial subsidies from China, and the investigation will determine whether these subsidies have given JD.com an unfair advantage in the acquisition. JD.com denies accepting any subsidies that may distort competition in the EU market during the process of the transaction. The EU China Chamber of Commerce stated that acquisition premiums are common, and EU investigations should be strictly based on verifiable facts and clear legal standards to avoid generalizing a company's normal financing ability, market-oriented efficiency, and innovative supply chain advantages as "market distortions".
This is the first time that the EU has launched an in-depth investigation into cross-border mergers and acquisitions by Chinese enterprises using FSR, and it is also the latest case of the EU abusing FSR tools to unreasonably suppress Chinese enterprises. The FSR will be implemented in July 2023, ostensibly to examine the impact of foreign subsidies on fair competition, but in reality it is a tool of EU trade protectionism. This regulation grants the European Commission the power to conduct "dawn raids" - inspections of foreign companies in Europe without notice. In February 2024, the European Commission launched an in-depth investigation into China National Rolling Stock Corporation's participation in the Bulgarian electric push-pull train procurement project based on FSR. This is the first investigation launched against Chinese enterprises after the FSR came into effect, which ultimately led to the withdrawal of CRRC from the bidding and the termination of the investigation.
Subsequently, the EU launched intensive FSR investigations into Chinese companies, expanding the scope of the investigation. It also upgraded the investigation into companies such as Tongfang Weishi to an in-depth investigation and forced Chinese banking institutions to cooperate with the investigation, unreasonably demanding extensive and unrelated information within China. Several Chinese enterprises and banking institutions have been severely negatively affected in their normal investment and operation in Europe. The Chinese Ministry of Commerce determined in January 2025 that the EU's approach constitutes a trade and investment barrier.
FSR is not the only economic coercion tool used by the EU against Chinese enterprises. The alliance has established systematic barriers against Chinese enterprises in various fields such as trade, industry, and procurement.
In the field of traditional trade remedies, the EU has continued to set trade barriers for advantageous industries such as Chinese steel in recent years, and has compressed the market space for Chinese products through unilateral tariff measures. From the overall number of trade remedy cases, in 2024, the European Union initiated a total of 25 trade remedy investigations and 21 cases involving China. In 2025, the European Union will preliminarily impose tariffs on 18 trade remedy cases against China, impose final tariffs on 18 cases, and initiate 15 trade remedy investigations. A recent case is that starting from July 1st this year, the EU's annual duty-free import quota for steel cannot exceed 18.3 million tons, a significant decrease of 47% compared to 2024. The tariff on imported steel exceeding the quota will be increased from the current 25% to 50%. This move is seen as targeting Chinese steel companies.
In the field of green transformation, the EU has built a trade wall under the pretext of addressing climate change. The Chinese new energy vehicle industry is a key target of the EU's crackdown. In October 2023, the European Union officially launched a countervailing investigation against Chinese electric vehicles. After a year of investigation, the European Union decided in October 2024 to impose a final countervailing duty on electric vehicles imported from China for a period of 5 years, with a tax rate of up to 35.3% for non cooperative enterprises. This significantly increases the cost of China's new energy vehicles entering Europe, directly impacting the Chinese automotive export industry chain. The EU Carbon Border Adjustment Mechanism (CBAM) officially came into effect on January 1st this year. This mechanism sets a significantly higher default value for the carbon emission intensity of Chinese products, which will be gradually increased over the next three years, constituting unfair and discriminatory treatment towards the Chinese side. In addition, the EU has implemented measures such as the Key Raw Materials Act and the Net Zero Industries Act, which provide significant green sector subsidies to local enterprises while also imposing purchase ratio restrictions on foreign products.
In March of this year, the European Commission once again released a proposal for the Industrial Accelerator Act. Some provisions of the bill impose a series of restrictive requirements on foreign companies investing in the four emerging strategic industries of batteries, electric vehicles, photovoltaics, and key raw materials. The China Chamber of Commerce for Machinery and Electronics stated in a recent statement that the origin requirements for public procurement and public support in the Industrial Accelerator Act may seriously affect the fair opportunities for Chinese related products to enter the EU market. The upper limit of shareholding ratio, mandatory technology transfer, proportion of local employees, and local procurement set by the foreign investment review clauses may impose significant restrictions on Chinese companies that have already invested in or plan to invest in Europe, greatly increasing investment uncertainty.
In the field of public procurement, the EU has decided to restrict the import of Chinese medical equipment based on the International Procurement Instrument (IPI) by 2025. According to this regulation, Chinese companies will be prohibited from participating in EU medical device public bidding projects worth more than 5 million euros in the next 5 years. In addition, even if non Chinese companies participate in bidding, if their use of Chinese made products and components accounts for more than 50% of the total contract value, they will still be restricted.
Presenting a systematic and comprehensive upgrade trend
Professor Huo Zhengxin from China University of Political Science and Law stated in an interview with Global Times that in recent years, the European Union has issued a series of laws and administrative measures targeting Chinese enterprises, with clear direction and obvious characteristics of selective law enforcement. In addition, the EU's investigation procedures are opaque and unreasonable, and Chinese companies have not been given sufficient opportunities to assert their rights. The trade and investment barrier investigation conducted by the Chinese Ministry of Commerce in early 2025 showed that in terms of time requirements, in multiple cases, the European Commission only gave the investigated companies 3 to 7 days to submit a large amount of information. In a certain investigation, the European Commission even required companies to submit funding information involving numerous affiliated companies within two days.
Li Chao, Deputy Director of the European Institute of the China Institute of Modern International Relations, summarized to Global Times reporters that the EU's economic and trade restrictions on China have shown a systematic and all-round upgrading trend, with the following prominent characteristics: firstly, the introduction of a systematic package of measures, no longer relying on a single trade remedy, but establishing a hierarchical and specific system from public opinion narrative to legislative regulation and implementation; The second is to promote the "securitization" of economic and trade issues, no longer simply viewing trade with China as a market competition issue, but gradually incorporating it into the "economic security" framework and implementing the so-called "risk reduction" strategy; The third is institutional discrimination and targeted exclusion. Although China is not explicitly named, through a series of indicator designs, China is effectively excluded from the EU trade and investment system; The fourth is to strengthen the linkage with the United States and coordinate the promotion of "de Sinicization" in key mineral and other fields.
Some European media have also criticized the EU's trade protectionism towards China in recent years. The German newspaper Frankfurter Allgemeine Zeitung previously stated that what the EU has done is simply an attempt to calculate the damage caused by China's so-called "unfair trade practices" through a set of seemingly objective facts and formulas, in order to conceal the nature of EU protectionism.
Finding the wrong direction cannot cure one's own illness
The EU summit will be held on June 18-19, and attendees are likely to discuss measures to further suppress Chinese companies, including the creation of new trade restriction mechanisms that will affect Chinese companies' entry into the EU's chemical, metal, and clean energy technology markets. The specific proposal is expected to be announced in the third quarter of this year.
Critics have pointed out that the escalating trade protectionism in the European Union is a result of its urgent and chaotic response to internal and external difficulties. Firstly, the intensification of global geopolitical conflicts and power struggles has amplified Europe's sense of insecurity. From the Russia-Ukraine conflict to the recent situation in the Middle East, the energy crisis has seriously damaged the EU economy and affected people's lives. After the current US government took office, the situation of the European Union became even more awkward: in the economic field, Washington not only imposed so-called "equivalent tariffs" on the EU, but also used steel and aluminum tariffs as a threat to force the EU to relax digital regulation; In the fields of diplomacy and security, the White House has repeatedly threatened to annex Greenland, the Danish autonomous territory, and has also forced EU countries to significantly increase military spending.
Secondly, the relative decline of the economy, especially the manufacturing industry, is one of the reasons why the EU feels frustrated, but it is unwilling to face its own problems. According to data from institutions such as the World Bank, from 2005 to 2024, Europe's share of global economic output in current US dollars fell from about 33% to 23%. From 2000 to 2024, the proportion of manufacturing in the EU's gross domestic product decreased from 17.4% to 14.3%. The sluggish recovery of the manufacturing industry has been a major challenge for the economic growth of the European Union in recent years. The EU's containment targets China's advantageous industries such as new energy and high-end equipment, aiming at the main competitors of EU industries, attempting to weaken the global competitiveness of Chinese industries through non market means and cover up the decline of its own traditional industries, in order to forcibly hold onto the market share of Europe's high-end manufacturing industry.
Finally, the decline in competitiveness and lack of innovation have made the EU feel left behind by some countries in this wave of technological revolution. According to media reports such as Deutsche Welle, as early as 25 years ago, the European Union was committed to becoming a "dynamic, innovative, and competitive region". However, the European Commission itself acknowledges that the alliance faces ten major obstacles in improving competitiveness, including cumbersome procedures for establishing and operating businesses, conflicting laws and regulations, and so on. Experts from the EU think tank Bruegel pointed out that there is a serious phenomenon of "fragmented achievements" in Europe - strong scientific research capabilities are isolated by isolated "islands" that cannot form a scale and business model. Faced with difficulties, the EU never thinks about how to reform itself and strive for strength, but instead vigorously promotes protectionism, which will only widen the gap between itself and other countries.
Liang Huaixin, a researcher at the Institute of National Security and Governance at the University of International Business and Economics, pointed out to reporters that the competitiveness of the European Union in emerging industries such as new energy and digital technology has seriously declined, and the development direction of industries such as greening that it has previously formulated determines that it cannot completely abandon these fields. Therefore, in the face of China, which has obvious comparative advantages in these fields, the EU has come up with the tactic of "playing tricks" and unreasonably suppressing China's related industries through various tariff and non-tariff barriers.
The German newspaper Frankfurter Allgemeine Zeitung bluntly stated that the EU's tough stance on China in trade policy vaguely reveals a sense of despair and highlights a defeat. China is full of innovative spirit, as evidenced by its massive patent applications in the field of artificial intelligence. The electric vehicles, solar panels, and wind turbines manufactured in China today are not just about winning at low prices, but also have excellent quality. Admitting this fact is difficult for Europe. By contrast, it is much easier to shift the responsibility for one's own failure onto others.
Liang Huaixin and Huo Zhengxin also hold the same view. Liang Huaixin bluntly stated that some EU politicians are unable to promote the development of their own industries through normal policies, and habitually shift the blame to China, attempting to internationalize internal issues. The EU wants to avoid its own industrial policy issues by restricting the development of Chinese enterprises in Europe and related economic and trade exchanges. This is a wrong direction and cannot cure its own illness, "said Huo Zhengxin.