Redefining China-EU Economic Ties: Targeted Countermeasures and a Three-Dimensional Strategic Shift Under the 'Partners, Not Rivals' Framework

Re-defining China-EU Economic and Trade Relations: Targeted Countermeasures Under the “Partnership” Framework and a Three-Dimensional Policy Shift

Against the backdrop of the EU’s Carbon Border Adjustment Mechanism (CBAM) entering into force, the EU’s new Battery Regulation approaching its mandatory compliance deadline, and a wave of green-policy-related trade barriers under the European Green Deal coming into effect, China has recently issued a fresh strategic framing of its economic and trade relationship with the EU—centered on the phrase “partners, not rivals.” This is no mere diplomatic platitude; rather, it constitutes a systematic signal embedded in concrete policy actions. On one hand, China’s Ministry of Commerce has initiated technical consultations with the EU regarding the anti-subsidy investigation into Chinese electric vehicles (EVs), aiming to establish a regular industrial dialogue mechanism. Simultaneously, China launched an anti-dumping investigation into pea starch imports from Canada—and imposed a provisional duty of 73.5% as a cash deposit. At first glance contradictory, these two moves form a highly coordinated policy package: prioritizing coordination with the EU to safeguard the stability of China’s largest trading partner, while applying precisely calibrated countermeasures against Canada to protect the security of China’s domestic food-processing and animal-feed industrial chains. This marks a fundamental shift in China’s foreign-trade governance logic—from “reactive response” to “proactive shaping.” In the second half of the year, policy will clearly follow a three-dimensional orientation: “coordination with the EU,” “tightened regulation vis-à-vis the U.S.,” and “expansion into emerging markets as alternative outlets.”

The “Partnership” Framing: Strategic Priority for Stabilizing the Core Trade Base

The EU has remained China’s largest trading partner for three consecutive years. In 2023, bilateral merchandise trade reached USD 783 billion, with over 55% of China’s exports to the EU consisting of electromechanical products. High-value-added categories—including new-energy equipment, high-end agricultural machinery, and intelligent food-processing equipment—showed particularly strong growth. Meanwhile, the EU’s green regulatory regime has effectively evolved into de facto technical trade barriers: CBAM currently covers six sectors—including steel, aluminum, and cement—with planned future expansion to hydrogen, certain chemical products, and electricity. The new Battery Regulation mandates that, starting in 2027, all traction batteries placed on the EU market must be accompanied by a Digital Battery Passport and meet strict targets for recycling rates and minimum shares of recycled cobalt, nickel, and lithium. A confrontational Chinese response would directly jeopardize China’s new-energy industrial chain, which generates over USD 100 billion annually in exports to the EU. Thus, the “partnership” framing reflects a rational cost-benefit calculus: proactively engaging in rule-making processes (e.g., participation in the EU’s Sustainable Battery Standards Working Group), implementing the China-EU Joint Declaration on Green Cooperation, and accelerating negotiations to revive the stalled China-EU Comprehensive Agreement on Investment (CAI). Such coordination is not unilateral concession but rather a collaborative effort to co-shape global green value-chain division of labor through shared standards.

Targeted Countermeasures: The Industrial-Security Logic Behind the 73.5% Deposit

In sharp contrast to its cooperative posture toward the EU, China moved swiftly to impose targeted countermeasures against Canada. Pea starch—a critical additive in animal feed and a stabilizer in food processing—saw Chinese imports reach 126,000 tonnes in 2023, over 68% of which originated from Canada. Investigation data revealed Canadian export prices were 32% lower than domestic Canadian prices, reflecting clear price-squeezing behavior that has already driven operating rates at starch producers in Shandong and Henan provinces below 40%. The 73.5% provisional deposit was not arbitrarily determined; rather, it resulted from quantitative analysis under Article 28 of China’s Anti-Dumping Regulations—specifically, the “threat of material injury” criterion. Projections indicated that, if dumping persisted unchecked, domestic capacity utilization would fall below the break-even point within 12 months, triggering cascading job losses. Notably, the target of this countermeasure deliberately avoids politically sensitive agricultural commodities such as soybeans or rapeseed, focusing instead on a deep-processed intermediate good. This approach sidesteps potential disputes under WTO agricultural agreements while striking directly at a structural vulnerability in Canada’s agricultural export value chain. Such “precision targeting” underscores a pivotal evolution in China’s trade policy: shifting from macro-level tariff bargaining to micro-level management of industrial-security thresholds.

Emergence of the Three-Dimensional Framework: Structural Reallocation of Orders and Compliance Costs

This integrated strategy is fundamentally reshaping operational logic for Chinese exporters. New-energy enterprises must now accelerate development of a “dual-track compliance system”: deploying CBAM-compliant data-collection modules and Digital Battery Passport management systems for EU-bound products, while simultaneously expanding into Middle Eastern and Southeast Asian markets to diversify risk exposure. Agricultural-machinery manufacturers face dual pressures—upgrading to meet revised EU EN ISO 14001 environmental management certification requirements, while coping with rising upstream raw-material costs stemming from China’s own anti-dumping investigations. Deeper implications extend to financial infrastructure adaptation: HKEX’s recent revision of its board-lot size framework (lowering the minimum trading value to HKD 1,000 and standardizing eight share quantities) may appear aimed solely at improving Hong Kong stock liquidity—but in reality, it provides a regulatory interface facilitating the return of U.S.-listed Chinese tech firms to Hong Kong listings. When Cambricon’s market capitalization surpassed RMB 1 trillion yet drew a CCTV editorial urging “sober determination,” markets recognized a crucial truth: valuations for hard-tech companies can no longer decouple from the pace of domestic substitution and the timing of real revenue realization. Likewise, compliance investments by exporters are transitioning from cost items to strategic assets—Huahong Semiconductor’s single-day HKEX share price surge of over 5% reflected enhanced order-premium capability following its automotive-grade chip production line’s certification under EU IATF 16949.

Conclusion: Forging a New Kind of Certainty Through Rule-Based Competition

The new framing of China-EU relations reveals a critical reality: in today’s era of globalization’s retreat, economic and trade relations are no longer defined along a singular axis of “friendship” or “confrontation.” Instead, they hinge upon the dynamic equilibrium among three interdependent capabilities—multilateral rule-adaptation capacity, precision in identifying industrial-security thresholds, and elasticity in substituting emerging markets. When state-owned enterprise (SOE) profits rose 3.5% year-on-year despite marginal revenue contraction, and when China’s first-ever classification guidelines for brain-computer interface (BCI) medical devices explicitly delineated clinical-pathway boundaries between “invasive” and “non-invasive” applications, these seemingly disparate policy signals converge on a shared core: China is deploying increasingly refined institutional tools to forge a new kind of certainty amid uncertainty. For exporters, the true challenge may no longer be whether they can “go global,” but whether they can build a globally scalable, verifiable, and auditable compliance operating system—one capable of navigating the EU’s green regulations, the U.S.’s Inflation Reduction Act localization clauses, and RCEP’s rules-of-origin accumulation provisions with equal agility.