China continues to follow its trade playbook with precision, maintaining the widest possible gap in its favor. In Q1 2025, EU imports from China fell 7% compared to the 2022 peak—but EU exports to China dropped even more sharply, down 11%. The result: the EU’s import-to-export ratio with China has hit a new all-time high.
In real terms, the price per unit of imports from China fell to ¥52 in Q1 2025, compared to ¥56 a year earlier.
As EU exports to China declined further in March, imports from China climbed 16%, maintaining a trade deficit of €1 billion per day.
On 30 December 2020, the EU and China concluded, in principle, negotiations on the Comprehensive Agreement on Investment (CAI). But within weeks, the deal went up in ashes — the damage was self-inflicted by China. The CAI was shelved and forgotten, something China likely regrets, while the EU has long since laid it to rest for good. According to EU officials quoted by the South China Morning Post, the chances of reviving the agreement are, for now, precisely zero.
“The European side has no interest in doing anything on the CAI.”- said Marjut Hannonen, head of trade for the European Union’s delegation in Beijing
Hannonen also added
“Overcapacity is an issue which we don’t see China addressing at all,”
China’s top four photovoltaic companies shipped a staggering 66 gigawatts in Q1 2025 alone—enough to match Spain’s entire installed solar capacity in just 45 days. The catch? All four companies are operating at a loss.
The European Union Ambassador to Beijing stated on May 9 that China is not doing enough to create a fair business environment for EU companies amid economic disruptions linked to US tariffs.
We have not been taken seriously regarding trade barriers, said EU Ambassador Jorge Toledo at an event in Shanghai. Market access obstacles are not decreasing; they are increasing.
According to data from Germany’s statistics bureau, German exports to China fell to €20.2 billion in the first quarter of 2025, down from €24 billion in the same period a year earlier. Notice that the drop is larger than in the rest of the EU.
Sea routes handle 96% of trade between the EU and China. The imbalance in the flow of goods is striking: by value, nearly four times more merchandise moves from China to the EU than the other way around.
Soon it will be two years since China imposed licensing requirements on exports of gallium and germanium
In 2024, the EU imported €2.4 billion worth of high apparent power solar inverters, of which €1.9 billion originated from China. High apparent power refers to larger inverters used in commercial and utility-scale solar plants.
In 2024, China reported importing 506 million barrels of crude oil from Malaysia. However, Malaysia reported exporting only 2 million barrels to China. The obvious mismatch corresponds to the long-known practice of transshipping Iranian oil before it arrives in China
On May 8, the U.S. Treasury launched a new round of measures aimed at ending this practice, sanctioning several Chinese companies – mostly teapot refiners in Shandong province
Subtly, China classifies these imports under the code 保税仓库货物, which refers to goods stored in bonded warehouses under customs supervision, with duties deferred until they are either re-exported or officially imported into China- placing them in a kind of permanent limbo
On May 13th, Xi Jinping met with the Community of Latin American and Caribbean States (CELAC) in Beijing. As expected, he stuck to the usual rhetoric—opposing hegemonism, pushing CELAC members to join his Belt and Road and Global Development Initiatives, while lecturing on U.S. unilateralism and protectionism, but without mentioning the U.S. directly.
On the trade front, China bragged about surpassing $500 billion in mutual trade with CELAC, a bloc of 33 countries—without mentioning that 37% of that trade is with just one of them: Brazil. For China, Brazil is an offshore source of commodities. One third of Brazil’s exports go to China, and nearly 90% of that is raw goods: ores, meat, crude oil, and soybeans.
Of course, the trade balance issue was carefully left out—it doesn’t fit China’s narrative of win-win cooperation. Hardly ideal for a Beijing gathering to remind the audience that, excluding Brazil—China’s main commodity supplier—China drained $80 billion from the rest of CELAC last year, over three times the surplus it had when Xi first took power.
China’s Ministry of Commerce introduced export controls on spherical graphite in October 2023, as part of broader restrictions on critical graphite products. Since peaking at 62,000 tons in 2022, exports dropped by one-third to 42,000 tons in 2024. However, in the first quarter of 2025, surging demand from the U.S. (up by 2,000 tons year-on-year) and South Korea (up 1,600 tons) drove a 153% increase in export volume. Indonesia also saw increased shipments, though FOB pricing suggests the graphite supplied there was of mid-purity grade.
In Q1, exports to the EU accounted for just 1% of the total
Statisticians often use Principal Components Analysis (PCA) to capture the main trend in a relationship, but also to uncover underlying factors that, while hidden and uncorrelated with the main factors, contribute to the trend.
The idea of a transcontinental megaproject was floated in 2013 during a meeting between Evo Morales and Xi Jinping. Dubbed the Central Bi-Oceanic Railway, the proposed 3,000 km line would cross Bolivia, linking Brazil’s southern port city of Santos with the southern Peruvian port of Ilo.
While the project remained dormant for years, China focused instead on building the port of Chancay, in north-central Peru. The port was inaugurated last November, with Xi Jinping attending – somewhat oddly, via video link, despite being in Lima just 50 miles away.
Now, Brazil, Peru, and China are reviving the bi-oceanic railway idea — but with a twist: the new route would start much farther north, in Brazil’s Bahia state, and connect to the newly built port of Chancay.
Geopolitical tensions are deepening the imbalance in cargo flows across major trade routes. With ships returning underloaded, empty containers are stranded in the wrong locations, creating shortages where they’re needed most. In response, China, the world’s leading container manufacturer, is ramping up exports to fill the gap.
The situation echoes the year after the initial COVID outbreak, when disrupted trade flows left containers scattered unevenly around the world.
As a proof, containers ranked as China’s top export to Denmark in Q1 2025 — home to shipping giant Maersk.
Gabrielius Landsbergis, Lithuania’s Minister of Foreign Affairs from December 2020 until November 2024, is spot on in his Substack post:
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