Since COVID-19, EU exports to China have contracted at a compound annual rate of 1%, while exports to the rest of the world have grown by 7% a year.
The resilience of EU exports so far this decade is notable, given China’s inward-looking strategy and Russia’s near disappearance from the EU export map.
By 2025, import volumes from China are 50% higher than in 2020, growing at a stunning annual rate of 9% a year.
However, by our estimates the trade deficit in 2025 will be substantially lower than the all-time high recorded in 2022, falling to about €360 bn from €397 bn three years earlier.
On 11 March 2018, during the first session of the 13th National People’s Congress, delegates voted by 2,958 to 2 to approve a constitutional amendment that removed the term limits for the presidency. The identities of the two delegates who voted against have never been made public, because votes in the NPC are formally treated as secret ballots. What we do know is that Xi has since shifted the course of some of his policies, and that in certain areas, such as his support for Russia and his strong focus on maintaining a large trade surplus, those choices have come with a cost, part of it self-inflicted.
Around 2013, Chinese economists and officials spoke quite openly about gradually reducing China’s trade surplus to almost zero by 2021, driven by stronger domestic consumption. With hindsight, that vision now looks very far from reality. China instead stuck to a strategy of running very large surpluses, and advanced economies have taken note. In 2025, about $100 billion is likely to disappear from its trade surplus with the EU and the United States.
China now wants to offset that loss somewhere else and is turning to developing economies as new outlets for its surplus.
China leans on a political narrative that celebrates “mutual” trade but systematically ignores trade imbalances. The playbook is clear:
China fast-tracks surplus extraction from developing countries.
Almost all of China’s additional 2025 trade surplus is carved out of developing partners in the Belt and Road, RCEP, ASEAN, Africa, Latin America and India. Beijing sells this as “mutual” trade, but the structure is clearly extractive.
China captures rising surpluses while many of its partners absorb the deficits and growing dependence on Chinese demand, finance and inputs.
Around two thirds of small parcels entering the EU are undervalued to avoid paying import duties. In 2024, about nine out of ten e-commerce shipments valued at under €150 and arriving in the EU came from China. Chinese platforms have persisted in their standard practice of splitting larger orders into many individual parcels when sending goods into the European Union. SOAPBOX has been reporting on this issue for years. The press release from the European Council is here.
Until 2023, the EU did not even have a specific import code for rare-earth permanent magnets.
China and Switzerland are in talks to update their 2014 free trade agreement to modernise rules and streamline procedures. Excluding gold, China’s imports from Switzerland have been broadly flat for a decade. Even with lower tariffs, a surge in watches, machinery or pharmaceuticals is unlikely.
Any gains are likelier in services, but we remain skeptical unless the two sides are quietly assembling a bespoke deal out of view. On a parallel track, Switzerland and the U.S. have cut the Trump-era tariff from 39% to 15%, tied to a Swiss pledge to invest $200 billion in the U.S.
That is the game now, hard-nosed bilateralism. Multilateralism is not just under strain. It is on the ropes.
The EU, U.S. and UK remain China’s main suppliers of large turbofan engines, and the 2025 import surge coincides with the ramp-up of the domestically developed COMAC C919. Industry sources say COMAC is scrambling for Western engines amid a global bottleneck. Despite the brouhaha, data show limits to China’s leverage
Despite the brief respite in October, when CPI rose 0.2% YoY on the back of a Golden Week spike in short-stay hotel prices, the underlying mild deflation persists.
Over the past 5 years, the compound annual growth rate of retail sales has been 3.5%. The growth rate for January–October 2025 compared with the same period a year earlier was 3.3%, while in October 2025 retail sales grew by just 2.9% year on year and were essentially flat month on month.
Current consumption stimulus acts largely as a subsidy to producers, merely bringing forward purchases that would have occurred anyway rather than lifting consumer sentiment.
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