Strength through partnership

Deeper cooperation with China would be more beneficial to the EU than confrontational 'derisking'

On Oct 9, China and the European Union issued a 16-point consensus on their trade and investment relations. The statement offered a welcome respite for China-EU trade and investment ties that have remained under strain, and opens a window of opportunity for the two giants to continue building a relationship that serves mutual interests.

These developments demonstrate that channels of communication remain open, and that both sides are seeking to manage their differences through consultation. Yet, reaching the consensus and keeping dialogue open is only a first step. Whether this window of opportunity produces lasting benefits will depend on how the EU understands the economic changes behind its concerns.

The EU is entitled to seek better opportunities for its businesses. Its concerns about manufacturing employment and supply chain security deserve attention. The problem lies in a growing tendency to interpret economic interdependence through the assumptions of strategic rivalry. Once a trading partner's success is routinely understood as one's own loss, even mutually beneficial transactions become politically suspect. This makes practical compromises harder to identify and harder to defend.

The China-EU trade imbalance illustrates the limits of this approach. According to data released by the European Commission, in 2025, the EU imported 559.5 billion euros ($626.5 billion) in goods from China and exported 199.5 billion euros to the Chinese market. The resulting deficit of about 360 billion euros is large, but it exists within a commercial relationship worth approximately 759 billion euros in goods alone. Reading those exchanges mainly through the deficit overlooks the businesses they sustain, the production they enable and the purchasing power they provide to consumers.

A bilateral deficit reflects differences in industrial structure, demand and the organization of production. It does not, by itself, establish unfair competition. Nor does it capture the full distribution of commercial benefits. According to data released by the European Commission, the EU maintained a 21.3 billion euros services surplus with China in 2025, while its investment stock in China reached 239.3 billion euros in 2024. European companies producing and selling in China earn revenues that do not appear as European goods exports. These interests should inform the debate over rebalancing.

Behind the trade tensions is a deeper adjustment. China's role in the world economy has changed, and European policy needs to accommodate that change. Cooperation can no longer rest on an assumed division in which Europe supplies advanced technology and China provides inexpensive manufactured goods. Chinese companies now compete in industries key to Europe's interests. This creates pressure, but also new opportunities for specialization, joint development and investment. Complementarity evolves as economies develop; it need not disappear when their capabilities become more comparable.

Protecting the expectation of technological superiority is a poor basis for industrial policy. Europe's manufacturers would benefit more from an environment that helps them innovate, invest and absorb new knowledge. Its own competitiveness assessment in 2024 found that companies faced electricity prices two to three times US levels and natural gas prices four to five times higher. Such disadvantages require sustained domestic reform. Restricting Chinese competition cannot resolve the energy, financing and market fragmentation problems that constrain EU industry.

Cooperation with China can contribute to the EU's reform and industrial upgrading. The 4.1 billion euros Chinese-European battery project in Spain, whose plans include training and eventually employing 4,000 Spanish workers, shows how cross-border investment can bring production capabilities into Europe. Its broader significance lies in the possibility of turning commercial interdependence into local employment, technical learning and stronger supplier networks. EU industry has more to gain when Chinese expertise becomes part of its productive capacity.

For this reason, cooperation belongs within a credible strategy for resilience. The 16-point consensus issued by China and the EU provides one example of how practical engagement can address industrial concerns. Clearer procedures and more predictable decisions would benefit businesses, which need certainty to have the confidence to plan that transition, rather than uncertainty generated by repeated threats of commercial confrontation. Both sides should allow concrete achievements to build support for continued engagement.

The wider relationship would benefit from the same approach. It is no secret that China and the EU have differences and may continue to disagree on some issues. However, stable cooperation requires the ability to manage those differences without allowing them to overwhelm shared interests. Clean energy, industrial decarbonization and more efficient use of resources offer substantial scope for cooperation. These areas become harder to develop when commercial decisions are repeatedly drawn into an expanding definition of strategic competition.

For the EU, maintaining that scope for cooperation is also an expression of strategic autonomy. The ability to pursue its own interests depends partly on having a broad range of economic partners and viable policy choices. A more confrontational relationship with China could reduce both. In a world already troubled by protectionism and geopolitical uncertainty, China and the EU have a shared interest in demonstrating that differences between major economies can be handled through negotiation and predictable rules.

The 16-point consensus can give practical expression to that shared interest. Brussels should approach the future negotiations with the confidence to recognize new forms of complementarity and the patience to develop them. A prosperous EU and a developing China have ample reason to support each other's progress.

The author is an associate professor and the acting deputy director at the Department of International Relations at the Institute of European Studies at the Chinese Academy of Social Sciences.

The author contributed this article to China Watch, a think tank powered by China Daily. The views do not necessarily reflect those of China Daily.

Contact the editor at editor@chinawatch.cn.