The EU’s trade deficit with China reached €360 billion in 2025, almost €1 billion a day. As Chinese exports continue to surge across sectors ranging from chemicals and machinery to automotive and clean technologies, Europe faces growing challenges to its industrial base, competitiveness and economic security. With Chinese exports to the EU increasing while European exports to China decline, concerns are mounting over the sustainability of the current trade relationship and its implications for Europe’s strategic autonomy and the global economy.

In their latest special policy paper, A New EU Structural Rebalancing Instrument to Respond to China’s Export Surge, Pascal Lamy, Victor do Prado and Nicolas Köhler-Suzuki argue that this surge cannot be explained by comparative advantage alone, but also reflects structural distortions driven by industrial policy, state support and weak domestic demand.

The authors therefore outline two complementary paths for Europe: negotiated restraint with China, alongside the development of a new Structural Rebalancing Instrument capable of addressing systemic trade imbalances more effectively. Their proposal seeks to strengthen the EU’s capacity to act while maintaining consistency with multilateral trade rules and preserving the rules-based international trading system.

Against the backdrop of Maroš Šefčovič’s recent visit to Beijing, Franco-German calls for stronger European action and the European Council of 15–16 October, this EuroQuestions invites Pascal Lamy to examine whether current negotiations can address the growing trade imbalance or whether the EU needs new instruments to respond to structural distortions.

Questions to answer:

Pascal Lamy is Coordinator of the Jacques Delors Institutes in Paris, Berlin and Brussels. He served as Director-General of the World Trade Organization (WTO) from 2005 to 2013 and as European Commissioner for Trade from 1999 to 2004. Previously, he was Chief of Staff to European Commission President Jacques Delors from 1985 to 1994. A longstanding advocate of European integration and multilateral cooperation, his work focuses on European affairs, international trade and global economic governance.