The EU's initiation of trade restrictions on China is a result of 'treating internal diseases externally'

Recently, the European Union is brewing a new trade restriction tool that is considered to be aimed at China's so-called "overcapacity". On May 26th, Spain, Italy, the Netherlands, France, and Lithuania jointly proposed to promote more aggressive trade defense measures, demanding the implementation of more urgent and extensive tariffs, safeguard measures, and anti circumvention mechanisms. At the same time, some think tanks such as the European Reform Center also advocate for "faster and stronger trade protectionism measures", and even propose to establish a "European version of the 301" tool modeled after the US "301 clause".

This is another "internal disease and external treatment" of the European Union on trade issues, which can be described as "the tools become more refined, but the root of the disease becomes deeper and deeper".

The EU has long hyped up the so-called "overcapacity" and "trade deficit", attempting to distort China's industrial advantages in areas such as electric vehicles and clean energy into a "threat", and thus put a legal coat on trade restriction measures. During the Biden administration in the United States, this argument of the European Union has been used by the United States to piece together an alliance to contain and contain the Chinese economy, frequently appearing at G7 summits, the US-EU Trade and Technology Council, and other occasions. In the electric vehicle double tariff event initiated by the European Union in 2023 and continuing until the end of 2025, the EU also labeled China with "overcapacity" and "dumping exports" as internal political and economic mobilization.

At the same time as repeating the old tune, the EU has transformed "overcapacity" from a controversial concept to a reason and basis for using trade protection tools at the legislative and institutional levels.

In recent years, the EU has frequently translated public opinion and strategic discourse into legislative practice. The EU's Foreign Subsidies Regulation, which will be completed in 2023, not only expands the interpretation and evaluation criteria for subsidies and government relations, but also constructs a policy tool framework to obstruct trade and investment beyond traditional tariff or investment review mechanisms, continuously targeting Chinese enterprises. Since 2026, the European Union has successively introduced draft amendments to the Industrial Accelerator Act and Cybersecurity Act, which tend to construct specific concepts as restrictive measures. From focusing on tariff measures and investment reviews, to constantly setting exclusive thresholds with different linguistic reasons, the disguise of EU trade protectionism has become increasingly sophisticated, but its essence has never changed.

From a motivational perspective, in addition to continuously promoting "de risk" and pan securitization of economic issues, the EU is also attempting to use the rhetoric of "overcapacity" to build more trade barriers, thereby constructing a "protective umbrella" for reshaping local industrial competitiveness. This move aims to slow down China's development and buy time for the European automotive industry to transform and reshape its international competitiveness. In the 21st century, Europe is attempting to revive the various policy legacies of 19th century economic nationalism, using methods such as transferring contradictions and constructing the image of "opponents" to blame external factors for internal development problems.

However, the EU's "overcapacity tool" is ultimately rooted in rhetoric and excuses, and cannot actually solve the core problem of the EU's declining competitiveness. Instead, it is prone to giving rise to trade conflicts, manufacturing supply chains, and cost fluctuations, exacerbating the difficulties faced by industries.

From the perspective of competitiveness, the EU attributes its own lack of competitiveness to external economies, which actually fails to address the root of its competitiveness challenges and the essence of promoting transformation. In recent years, the Leta Report and Draghi Report released by the European Union have directly pointed out the internal structural problems of the EU economy: redundant approval and regulatory processes, which significantly increase the structural burden of corporate investment and factory construction; The energy cost is high, with natural gas prices 4-5 times higher than in the United States, and electricity prices several times higher than in both China and the United States. When high energy consuming enterprises such as chemical, energy, and machinery bear higher electricity prices, more complex approvals, higher financing costs, and more fragmented market rules in Europe, their industrial chain relocation is an inevitable result of market rationality. Instead of blaming others for 'overcapacity', it's better to first look at the root of one's own 'lack of competitiveness'.

From a conceptual perspective, 'overcapacity' is a typical economic pseudo proposition that seriously distorts the economic logic and inherent essence of international trade and global division of labor. The EU's criteria for determining so-called "overcapacity" are narrowly limited to the export situation of other countries' products and their global share of production capacity. However, in fact, if there is no demand in the external market, mutual trade cannot achieve mutual exchange and economic benefits, and trade demand cannot be generated. In recent years, China has continuously promoted high market competition in industries such as clean energy and electric vehicles. Enterprises rely on their own research and development capabilities to cultivate their own development momentum and create competitive advantages. Their achievements in foreign trade and industrial development are entirely dependent on external demand for high-quality Chinese goods. In fact, from a global demand perspective, both the International Renewable Energy Agency and the International Energy Agency have pointed out that the current demand for related products to achieve green transformation goals far exceeds the supply capacity. The world still needs to further reduce the cost of related clean energy products to meet the development needs of countries in the global South. Therefore, if exports are used as a reason for overcapacity, it will overturn the basic logic of international economic relations and disregard the rational willingness of countries to exchange resources for economic rationality.

Therefore, the EU's "overcapacity theory" and its policy toolkit are actually using so-called economic or security concerns to protect trade, which will not only continue to shake mutual trust and economic and trade ballast relations between China and Europe, but also further undermine its image as a defender of economic and trade rules. Those who build walls will eventually be surrounded by them. When the EU lifts the big stick of protectionism, it may ultimately hit its own feet. (Author's affiliation is the Institute of National and Regional Studies, Beijing Language and Culture University)