EUCCC’s headline recommendation to let market forces play the decisive role conflicts with China’s current policy mix.
Party leaders may say so in official statements, but in practice policy prioritises self-reliance, state-led industrial policy, dual circulation, export controls, localisation and SOE primacy. For now, the Chamber’s recommendation remains, in our view, wishful thinking.
Belt and Road is a surplus machine. China builds the corridor, finances the corridor, ships through the corridor, and books the surplus. RCEP and ASEAN are the factory loop; Latin America, Africa, and Australia are the resource loop. The EU is the reluctant customer that still buys, though its patience is wearing thin. The United States is the outlier, with patience already exhausted.
This is not hedging, it is mercantilism with Chinese characteristics. Shift volume to friendlier lanes, keep prices sharp, recycle the proceeds into new lanes. Sanctions and tariffs did not shrink China’s surplus. They rerouted it. The map changed; China didn’t, so the math didn’t.
In July 2025, EU exports to China fell 7% year on year. Imports rose 4%. The trade deficit widened 11% to €31 billion from €28 billion in July 2024, roughly €1 billion a day.
The EU’s monthly deficit is nearly four times what it was when Xi took office.
If you’re interested in absolute values rather than Germany’s share of EU exports, here’s another look at Germany’s current woes.
Germany is down 14% while the rest of the EU is down 7%. Overall, EU exports to China in January–July 2025 are down 10%.
Monthly exports fell from roughly €1.5 billion in 2021 to barely €1 billion in 2025.
On 19 September, the European Commission unveiled its next Russia sanctions package and confirmed the crude oil price cap is now $47.6 per barrel. Von der Leyen also said the EU will go after refineries, oil traders and petrochemical companies in third countries, including China.
From January to August 2025, China imported an average of about 2.0 million barrels per day of Russian crude at roughly $68 per barrel, around $33.3 billion in payments. About one-third was destined for independent “teapot” refiners in Shandong, while close to another third entered via Heilongjiang, the Mohe–Daqing pipeline gateway for Russian crude.
At $68/barrel, most of these flows clear above the new EU cap, i.e., outside Western shipping and insurance services governed by the price-cap regime.
In 2013, the EU shipped about five containers to China for every six it imported. By 2025, the ratio has deteriorated to three for every ten, a stark widening of the gap.
Since COVID, import volumes are up 50% while export volumes are down 43%. Simple as that.
After serious incidents, Poland closed its border with Belarus. About 1,600 tons of Chinese goods enter the EU through that corridor each day. The shutdown hurts Chinese exporters, so during his visit to Warsaw, Foreign Minister Wang Yi pushed for the border to reopen. The request is misdirected: Wang’s pressure should be aimed at Russia, which created the problem.
We doubt that will happen. This is the familiar geopolitics-agnostic mercantilism China practices when convenient.
In 2023, pure-electric cars made up 88% of new-energy vehicle imports from China. After the EU’s punitive tariffs, total imports fell nearly 50% from their peak. The mix has shifted toward plug-in hybrids, which now account for 41% of imports from China.
From January to July 2025, EU imports from China of pure electric and plug-in hybrid cars were flat year on year and 23% below the 2023 peak.
The factory belongs to Neo Performance Materials, a Canadian company. It is located in Narva, on the border with Russia. If the plant scales as planned, about 350 jobs are expected within 18 months.
The EU currently imports about 95% of its rare-earth permanent magnets from China. In 2024, Neo exited its China rare-earth separation assets, selling majority stakes and closing one facility. It still operates manufacturing in China, including a Magnequench NdFeB powder plant in Tianjin and an NdFeB magnet plant in Chuzhou.
From Politico
“The European Public Prosecutor’s Office (EPPO) seized 2,435 shipping containers at the Port of Piraeus, Greece’s largest, which is majority-owned by Chinese state-owned enterprise COSCO. The containers were primarily filled with e-bikes, textiles and footwear. It was the largest seizure of containers in the EU in history.”
RMB payments on SWIFT surged into spring and faded by late summer. The pattern looks seasonal and deal driven, not a structural shift in global take-up. Without looser controls and better incentives to invoice in RMB, adoption will remain choppy at best.
It remains to be seen whether a broader set of commodity exporters will price and settle in RMB, beyond sanctioned-Russia and other China-aligned sellers such as Brazil.
On rates, a small Fed cut helps at the margin; it’s a nudge, not a game changer.
Hungary is set to run a $4.6 billion surplus in 2025, but a $9 billion deficit with China dominates. The projected surplus is about 2% of Hungary’s GDP, while the China deficit is roughly 4%. The China deficit is set to be more than three times its 2017 level.
Manufacturing grew 5.7% in August, outpacing retail at 3.4%.
The Chinese government is leaning on factories and exports while households stay cautious in a mild deflation environment. That mix keeps volumes up but squeezes margins.
Exports are being re-routed, not booming. External demand is doing the heavy lifting, helped by price competitiveness and market reallocation through RCEP/BRI lanes. Good for headlines, tougher for profitability and trade frictions. Bottom line:
China is engineering growth from the factory gate out
In October 2015, Xi’s state visit to the UK was sold as the dawn of a China–UK ‘golden era,’ a phrase echoed in the joint statement with David Cameron. It wasn’t golden for Britain. For Xi, it was golden where it counts: the trade balance.
Since Xi took power, China’s goods surplus with the UK has roughly doubled from about $32 billion in 2013 to an estimated $67 billion in 2025. Each Brit foots the bill for about 800 quid a year.
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