EU presses tougher China policy

Spain, Italy, the Netherlands, France and Lithuania have moved to push Brussels toward a tougher industrial policy on China just days before a European Commission debate that could shape the bloc’s next trade measures. A paper signed by the five governments calls for a more aggressive response to what it describes as “systemic and structural industrial overcapacity,” language European officials often use for China. The document, seen by the South China Morning Post and first reported by the Financial Times, backs faster emergency tariffs, wider safeguard measures and new anti-circumvention powers. The intervention lands as the European Commission prepares a China policy orientation debate for May 29. ### Which EU governments are pushing this now? Spain, Italy, the Netherlands, France and Lithuania are the five governments named in the paper pressing for a harder line before the Brussels debate on May 29. The document says the bloc should respond more aggressively to industrial overcapacity that is harming European producers, according to the South China Morning Post. (scmp.com) May 25 is the date the latest push became public, but the debate has been building for weeks inside Brussels. A May 5 South China Morning Post report said the Commission was already sounding out industry groups on a new trade instrument aimed at Chinese overcapacity and wanted to put options before President Ursula von der Leyen ahead of the commissioners’ meeting. (scmp.com) ### What are they asking Brussels to do? The paper calls for much more aggressive use of EU safeguard measures, which allow tariffs or quotas when import surges are judged to be harming local industry. The signatories want Brussels to move beyond product-by-product anti-dumping cases and use broader tools for sector-wide disruption, according to the South China Morning Post. (scmp.com) A proposed “resilience tool” is also under discussion. The South China Morning Post reported on May 25 that the paper floated a mechanism that could be activated when European supply sources are concentrated beyond a specified threshold, alongside new anti-circumvention powers. ### Why is overcapacity at the center of the argument? A March 2026 European Parliament study said industrial overcapacities, particularly from China, are seen as a threat to European manufacturers and as a source of distorted competition in bilateral trade. (scmp.com) The study said it found overcapacity across most industrial sectors in China and said competitive pressure on European companies was likely to persist or intensify. The same study also said the risks are sector-specific. Electric vehicles, batteries, semiconductors, hydrogen and robotics were among the sectors examined, and the authors said some risks were partly mitigated by value-chain dynamics and technological leadership in Europe. ### Is Brussels already preparing new trade tools? The European Commission has been working on a broader instrument than standard anti-dumping and anti-subsidy cases, according to the May 5 South China Morning Post report. (europarl.europa.eu) That report said Commission officials believe the existing toolkit is too slow and too narrow to deal with what they see as a systemic challenge from Chinese industrial policy. Ursula von der Leyen is expected to receive the outline of that instrument at the May 29 debate among all 27 commissioners, the same report said. The proposal had originally been penciled in for an April discussion before being delayed. ### What could this mean for Chinese companies in Europe? European safeguard measures could mean tariffs or quotas on imports if Brussels concludes that surges are damaging local industry. (scmp.com) That would raise pressure on Chinese manufacturers shipping directly from China into the EU market. Local production inside the bloc is one possible response. The policy debate in Brussels is centered on curbing the impact of Chinese exports, but trade barriers can also encourage companies to build or expand factories inside the European Union instead of relying only on imports, an inference supported by the Commission’s focus on anti-circumvention and supply concentration. (scmp.com 1) (scmp.com 2) ### What happens next in Brussels? May 29 is the next concrete date. The European Commission’s China policy orientation debate is due to bring all 27 commissioners together to discuss trade tools, overcapacity and the bloc’s wider approach to Beijing, according to the South China Morning Post. Any formal instrument would still need to move beyond internal Commission discussion. (scmp.com) For now, the clearest near-term milestone is whether von der Leyen’s team turns the five-country paper and the Commission’s draft work into a public proposal before the bloc’s August break. (scmp.com)