BRUSSELS, Sept. 18 (Xinhua) -- European Commission President Ursula von der Leyen said in her State of the Union address that the European Union (EU) would use all tools at its disposal to reduce its trade deficit with China.
But Europe's economic challenges cannot be reduced to its trade deficit with China. If Europe wants to revive growth and strengthen its industrial base, openness to trade, investment and innovation remains essential.
That makes continued economic engagement with China important to Europe's own growth prospects.
The EU's own trade figures show why the bilateral balance should not be viewed in isolation. According to EU official data, in the first quarter of 2026, the EU recorded a 12.7-billion-euro (or 14.58-billion-dollar) surplus in goods trade with non-EU countries. The trade deficit with China is only one part of Europe's broader global trade picture.
While Europe's concerns over trade imbalances with China are often framed in stark figures, trade figures alone cannot explain the full picture of a deeply integrated and mutually beneficial economic relationship.
A considerable share of China-EU trade is generated by European companies operating in China. While products manufactured by these firms are recorded as Chinese exports, much of the profit, technology dividends and shareholder value ultimately accrues to European businesses.
At the same time, nearly half of China's exports to Europe consist of intermediate goods, which are indispensable to European manufacturing. These inputs help European companies lower production costs, improve efficiency and maintain competitiveness in global markets.
Chinese products also play a stabilizing role in Europe's economy. Affordable imports have helped ease inflationary pressure in recent years, while supply chain inputs from China have supported industrial production amid growing global uncertainty.
Europe also has substantial work to do at home. As von der Leyen herself identified, high energy prices, fragmented capital markets, slow project approvals and burdensome red tape are weighing on European businesses. The Draghi report on EU competitiveness likewise highlighted sluggish productivity growth, chronic underinvestment and an aging workforce.
These challenges require domestic reforms, rather than protectionist measures to cut the trade deficit with China.
As two major economies, China and the EU together account for nearly 30 percent of global trade and more than one-third of global economic output, data from the EU showed. In 2025, two-way trade amounted to 828.1 billion U.S. dollars, according to China's statistics. Such extensive ties give both sides a reason to keep the relationship stable and predictable.
China and Europe have long maintained structured dialogue mechanisms to manage economic differences. But trade talks between China and the EU cannot be driven by one-sided demands and should instead address the concerns of both sides on an equal footing. Neither side should make unilateral demands or dictate terms, nor should either side resort to coercive measures such as restricting market access.
For Europe, a more productive path is clear: strengthen competitiveness at home while keeping economic ties open abroad. Trade balances deserve discussion, but they should not become a pretext for closing markets or turning economic interdependence into confrontation. A stable and open China-EU economic relationship serves the broader interests of both sides.■
