In a masterstroke of ambiguity, VDL’s opted for “inflection point” rather than “turning point” to describe the state of EU-China relations, a choice that feels deliberate, hinting at a shift, but not necessarily an improvement. Even if something is going downhill, it can still accelerate its decline.
As for China, Xi’s speech was, as expected, political posturing, a flood of ‘harmony with Chinese characteristics’ and appeals for strategic unity between the two ‘big guys’: China and the EU
In the end, the summit produced little more than symbolic nods to climate cooperation.
China is still the EU’s factory, but it’s no longer much of a customer. The graph says it all. The imbalance is politically unsustainable, and the trendlines give EU leaders further ammunition to press ahead with de-risking and accelerate diversification away from China.
Expect more calls across Europe for industrial policy, reshoring, and tougher trade defense tools, all driven by a growing asymmetry in trade. The EU’s dependence on China for critical goods is increasingly seen as a liability, especially as access to Chinese consumers becomes more restricted.
Frustration is at an all-time high, particularly among those who once championed a “win-win” trade relationship. Now they are forced to confront the reality of stagnant exports, a clear result of China’s dual circulation strategy, which appears to be closing doors rather than opening them.
Layer onto this the continued and blatant support China extends to Russia’s invasion of Ukraine, an “existential” concern for the EU, and it becomes hard to avoid one conclusion: tensions between the EU and China are likely to get significantly worse.
When the EU chose to sever its economic ties with Russia after the 2022 invasion of Ukraine, it did more than shift trade flows, it acted on conviction. In just three years, imports from Russia dropped from over €200 billion to a projected €30 billion. This wasn’t easy. It meant energy shocks, inflation, and tough adjustments. But it showed that deep beliefs aren’t just words. They cost. And they matter.
On July 18, the European Union adopted its 18th package of sanctions against Russia. This round targets several Chinese financial institutions for the first time and also lowers the price cap on Russian crude oil to $47.60, down from the previous $60.
While major Chinese banks have largely steered clear of financial dealings with Russia due to fears of secondary sanctions, smaller entities in border provinces have continued to facilitate transactions. Additionally, the Shanghai branch of Russian bank VTB has appeared in Baidu ads claiming to offer an “anti-sanctions payments channel” that avoids SWIFT-related risks.
As for crude oil, China has been importing Russian barrels in 2025 at prices nearly 8% below the EU’s previous cap. It remains to be seen how Beijing responds to the newly lowered threshold.
Today, China sends around 54% of its exports to advanced economies and 46% to developing countries. But with rising geopolitical tensions and a steady slowdown in trade with the West, that balance may soon shift.
At present, Chinese exports to developed economies are growing at a modest 1.7% annually, while exports to developing countries are rising at a little over 11%. If China aims to maintain its current overall export growth through 2028 while gradually reversing the ratio, sending 46% to advanced economies and 54% to developing ones, it faces a significant challenge. The difficulty grows if exports to advanced economies decline by 1% each year, as might be expected under sustained geopolitical strain.
Under those assumptions, China would need to grow its exports to the Global South by an ambitious 13% annually to stay on course. That is a tall order. The math is straightforward, but the execution is far from simple. It is unclear whether many developing economies can absorb such a dramatic surge in Chinese exports.
One important caveat remains. This projection assumes that exports to large developing markets such as Nigeria, India, Indonesia, Brazil, and even Russia will keep growing without major disruptions. That is a big assumption, and it may not hold either.
High-performance permanent magnet materials, explicitly categorized under HS 85051110, are now subject to export controls. Exporters must obtain a permit from MOFCOM.
While exports of rare earth-based permanent magnets dropped 19% in volume compared to 2024, export prices have fallen by 40% from their peak three years ago.
Breakdown by quantity of China’s exports of HS 85051110, first half of 2025. The EU sources 95% of this product from China.
As of July 24, 2025, China’s anti-dumping investigation into EU pork imports remains ongoing, with no cancellation or formal postponement announced.
In the first half of 2025, imports of pork meat cuts from the EU rose 18% in value, while imports of swine offal increased by just 3%. Overall, China’s pork imports from the EU grew by 9% year-on-year.
By market share, Spain accounted for 57% of the pork cuts supplied by the EU to China, followed by the Netherlands (14%), Denmark (12%), and France (10%). For swine offal, Spain also led with a 43% share, trailed by the Netherlands (20%), Denmark (16%), and France (14%).
Total pork imports from the EU reached $1.2 billion in the first half of 2025, up from $1.1 billion in the same period last year.
Meanwhile, China has increased its pork imports from Russia ninefold though volumes remain small.
In H1 2025, combustion car exports fell 9%, electric car export value dropped 5%, while hybrid exports jumped 90%.
Brazil and China have signed an MoU to explore a rail connection from Brazil to Peru’s Chancay port, a project developed with Chinese investment and 60% owned by COSCO. The agreement involves Brazil’s Infra agency, under the Transport Ministry, and China Railway, a state-owned enterprise.
Peru’s Prime Minister, clearly irritated, said the government had received no official communication about the supposed Brazil-China deal to link Brazil’s Atlantic port of Bahia with the Pacific port of Chancay.
“A statement between two countries is not an official proposal to Peru,” he said sharply.
While the port began operations late last year, Peru is only now realizing that its domestic road network is still in its infancy. Just 25% of its roads are properly paved. There’s growing concern that, logistically, Chancay may have put the cart before the horse. It currently takes longer to move goods from inland Peru to the port than to ship them to China, a 27-day sea leg. On July 25, port calls totaled just seven, with only one Chinese vessel among them. Operated by COSCO, of course.
Be cautious, though.
Chinese exporters engaged in a pre-emptive frontloading frenzy in mid-June. Exports from platforms like Temu, AliExpress, Shein, and similar companies to the U.S. dropped to $9.7 billion in the first half of 2025, down from $10.6 billion over the same period last year.
According to SWIFT, in June 2025, the RMB remained in the same position as the 6th most active currency for global payments by value, with a share of 2.88%. Overall, RMB payments increased by 2.57% compared to May 2025, whilst in general all payments currencies increased by 2.85%.
Back in 2015, the average was 45 hours per week
This 1993 photo shows Li Ka-shing, founder of Hutchison, and Premier Li Peng during the signing ceremony for the construction and 50-year lease agreement of Yantian Port in Shenzhen.
The Chinese government is maneuvering to enable its state-owned company COSCO to join the purchase, currently offered to BlackRock, of dozens of ports owned by the CK Hutchison Group abroad, including two in Panama. The current Chinese leadership seems to consider this move a slap in the face from someone once considered “one of us.”
The deadline for the CK Hutchison–BlackRock agreement was July 27, but at the time of writing, all indications suggest it will likely be extended.
Although the Chinese government has not set specific percentage targets for the share of general trade in total trade, there is broad consensus among Chinese scholars that it will continue to grow significantly. This view is supported (they claim) by domestic analyses, which often project that general trade could account for around 70 percent or more by 2030. Such an increase is seen as strategically important for China. However, recent figures suggest that this growth may have already hit a ceiling in 2023.
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