China has warned the European Union against expecting concessions through economic pressure, as Brussels moves towards developing a new instrument that could allow it to restrict Chinese companies’ access to the bloc’s single market immediately. The exchange signals continuing tensions between two of the world’s three largest economies, despite a recent agreement to limit the volume of Chinese hybrid cars shipped to Europe.
“The EU should not fantasise about gaining benefits through pressure, nor should it underestimate China’s determination and ability to safeguard its own interests,” China’s Ministry of Commerce said in a statement on Friday. The ministry was responding to reports that European officials believed the bloc’s tougher stance had compelled Beijing to reach the hybrid vehicle agreement, concluded a week earlier.
“The claim that ‘pressure from the EU side proved effective’ is entirely groundless,” the ministry said, rejecting the interpretation that Brussels’ approach had delivered a diplomatic victory.
European Commission President Ursula von der Leyen confirmed on Friday that the EU would develop a new instrument to restrict access to its single market, alongside intensified dialogue with Beijing. The proposal follows a joint initiative by France and Germany aimed at giving the bloc stronger means of responding to Chinese economic coercion and market distortions. EU leaders endorsed the proposal unanimously during a summit in Brussels.
“Building on this [French-German] paper, we’ll develop a new instrument for decisive action by limiting access to the single market where it is in the union’s interest – fast and immediately,” von der Leyen said at a press conference after the European Council summit.
The proposed mechanism would give the EU an additional means of responding if Beijing used economic dependencies to pressure European governments. Officials cited the possibility of China restricting exports of rare earth minerals in retaliation for increased European trade investigations. Such a response could prompt Brussels to limit Chinese products’ entry into the European market.
The instrument is expected to be proposed in December as part of a broader package. The accompanying measures would include a diversification instrument requiring companies to reduce their reliance on Chinese supplies, as well as a solidarity mechanism intended to compensate those affected by Chinese retaliation. At least 13 of the EU’s 27 member states would need to support activating the new instrument. Officials acknowledge, however, that ensuring compliance with World Trade Organization rules could prove difficult.
The initiative reflects a shift towards greater agreement among EU governments over how to handle China. German Chancellor Friedrich Merz emerged as one of the strongest critics of Chinese policies during a lunchtime debate at the summit, despite having called for a free-trade agreement with Beijing barely six months earlier. German officials said Berlin now wanted to take a leading role in shaping the bloc’s China policy, while expressing confidence that other member states supported the proposed measures.
Von der Leyen said the summit had demonstrated “remarkable unity”, contrasting the agreement with previous meetings at which disagreements over China had frequently prevented the issue from remaining on the agenda. European leaders also backed a two-track strategy combining dialogue with the threat of trade action.
Belgian Prime Minister Bart de Wever said there was broad agreement on concerns about currency depreciation, subsidised industrial overcapacity and the organisation and potential weaponisation of critical dependencies. “The advantage of all being in the negative [trade balance] is we finally all agree that this cannot go on like this,” he said, describing the summit debate as a “step in the right direction”.
French President Emmanuel Macron called for particular attention to chemicals, plastics and ferroalloys. Von der Leyen also identified chemicals and machinery as priorities for further trade safeguards, which could include quotas and tariffs covering broad categories of products. No final list of targeted sectors was announced.
Lithuanian President Gitanas Nauseda said the proposed instrument could restrict Chinese products or even close the European market to them if China engaged in unfair trade practices. “That would be an extreme measure, a drastic instrument,” he said.
