Eurostat’s 2025 release shows a familiar and unresolved pattern in EU-China trade. The EU is buying more from China (+6%), selling less to China (-7%), and the deficit is widening (+15%), which demonstrates Europe still has not found an effective way to improve, or rebalance, its trade position.
In line with earlier SOAPBOX projections, the EU’s trade deficit with China exceeded $400 billion in 2025, about €1 billion per day.
China’s surplus with the EU alone was roughly one-third of its record global goods surplus of around $1.2 trillion.
Despite the bravado in parts of China’s media and lobbying ecosystem, the short-term reality is simple: China’s export machine still depends heavily on EU demand, which should impose at least some restraint on Beijing’s trade diplomacy.
EU exports to China are shrinking for a third straight year, with the contraction accelerating from -3.0% to -4.5% and then -6.5%. They are now below 2020 levels, back near 2019, and at risk of falling under €200 billion.
If the trend holds, China could be near 5% of EU exports by decade-end, moving from core market to secondary destination while EU exporters in many categories diversify elsewhere.
With China manufacturing across nearly every product category, the EU’s 22% import share is no abstraction: in daily life, Europeans are surrounded by goods made in China. At the same time, both SMEs and large firms depend in some segments almost entirely on Chinese inputs, from solar inverters and lithium-ion batteries to rare-earth magnets.
Since late 2017, China’s domestic demand has steadily cooled. Dual-circulation policies deepened that trend by prioritising import substitution, and COVID ultimately accelerated promise fatigue among European exporters, who became increasingly oriented westward.
Proposals now circulating under the EU’s Industrial Acceleration Act have triggered clear concern among Chinese companies. Their Brussels-based chamber appears especially worried about possible limits on foreign direct investment from countries that account for more than 40% of global output.
This concern is understandable. The issue is less about trade flows and more about who captures profits across the value chain. Overcapacity in China has squeezed factory margins, and in several sectors where China dominates global output, manufacturing now operates on near-zero margins and, in many cases, at a loss. Solar photovoltaics are a good example: exports can keep volumes high, but they do not always deliver profits.
Chinese firms and policymakers know that much of the profit now sits downstream. The higher-value layers are often project deployment, system integration, financing, software and control systems, maintenance, spare parts, and long-term service contracts.
That is why market access is no longer only about selling goods. If destination markets allow the product in but restrict who can install, operate, and service it, Chinese firms risk being pushed into a low-margin manufacturing role while higher-value gains are captured locally.
In short, production scale still provides leverage. But durable profits and strategic control increasingly sit in downstream execution. This explains the intensity of Chinese opposition to any EU measure that limits downstream market access.
The fact that these inverter codes appear only from 2023 is not a minor technical detail. It shows how late Europe began measuring this dependency with the level of precision policy now requires.
Imports from China in these categories total about €3 billion, down 47% from two years earlier, largely due to a cut-throat price war in China’s PV sector
Next week, German Chancellor Friedrich Merz is scheduled to visit China, his first trip there since taking office. Trade will be high on the agenda, but he is likely to face a firm Chinese line on a wider set of issues.
In parallel, Chinese state messaging presents visits by European leaders as validation of Beijing’s narrative, while Beijing deliberately intensifies one-to-one engagement with individual EU member states.
This is not an EU tone shift, but a China tone shift.
In 2023 and mid-2024, Beijing answered the EU BEV case with confrontational language, calling the move protectionist and warning that model-by-model or brand-by-brand talks could “shake mutual trust.”
But now, the tone radically changed.
This shift is not diplomatic generosity, but market reality. EU imports of China-made BEVs fell from €11.0 billion in 2023 to €6.3 billion in 2025, a drop of about 43%. After the EU approved extra duties, the decline continued, suggesting that when market access tightens and exports fall, China’s rhetoric gives way to adaptation.
In our view, the measure, effective February 13, is clearly retaliatory. It was foreshadowed in August last year and appears to have already affected EU exports in the targeted categories, which are down about 15% versus 2024 and nearly 10% below the five-year average.
Although the affected export value is small relative to total EU exports to China, the measure targets a strategically important EU sector: agri-food. The most affected member states are France (38%), Italy (14%), the Netherlands (12%), and Denmark (12%).
Also viewed as a retaliatory move, China opened an anti-dumping probe into EU pork on 17 June 2024 and issued its final ruling on 16 December 2025. In volume terms, EU pork meat exports to China fell 11% versus 2024, while offal declined 3%.
Four years ago, on 4 February 2022, Putin met Xi in Beijing and both sides declared a “friendship without limits.” Three weeks later, Russia invaded Ukraine.
Since then, Beijing has avoided condemning the invasion, maintained political alignment with Moscow, and kept bilateral economic ties on an elevated track.
The trade data are consistent with that continuity. Indexed to 2021, China’s imports from Russia rose to 159 by 2025, while imports from Ukraine fell to 28. The post-2022 divergence is not marginal; it is structural.
Whatever the diplomatic framing, China’s import profile has moved decisively toward Russia and away from Ukraine.
