China deploys divide and conquer tactics on EU trade

Europe risks full deindustrialisation unless it stays united, warn analysts

Financial Times Europe27 Jul 2026JOE LEAHY PETER FOSTER ANDY BOUNDS

Brus sels’ decision to tar get one of China’s most fam ous dishes, Pek ing duck, for ananti-dump ing cam paign was a cue for Chinese pro pa gand ists to engage in one oftheir favour ite pas times: EU bash ing.

“Why is ‘European duck’ so afraid of ‘Pek ing duck’?” said the Com mun ist Party’snation al ist tabloid the Global Times, refer ring to EU accus a tions this month thatPekin duck, the meat used in the dish, was fattened up with state sub sidies in Chinabefore being dumped in Europe. The paper said Europe’s ducks were let down bythe bloc’s “high energy costs and fra gile sup ply chains”.

As the EU battles China’s grow ing trade sur plus, Beijing is resort ing to what ana lystssay is a time-tested play book — attack ing Brus sels, which sets trade policy for thebloc and wields its col lect ive power, while indi vidu ally court ing the more vul ner -able 27 mem ber states. In the first half of this year, China’s trade sur plus with theEU, which hit €360bn in 2025, rose another 24 per cent year on year.

Beijing is also quietly lever aging rela tions with coun tries adja cent to the bloc, suchas the UK and Morocco, to gain access to the EU single mar ket, and is seek ing toinflu ence European com pan ies with large oper a tions in China, ana lysts say.

“We are 28 voices in Europe — 27 mem ber states plus the European Union — and ithas always been a favour ite pas time of the Chinese lead ers to divide and con querus. And it always works,” said Joerg Wut tke, a part ner at con sultancy DGA Group.

But ana lysts believe that grow ing Chinese sur pluses might finally force Europe tocall time on this tac tic or risk full dein dus tri al isa tion.

Maroš Šefčovič, EU trade com mis sioner, agreed with Chinese com merce min is terWang Wentao in June to con duct con sulta tions cov er ing four areas: trade andinvest ment bal an cing, export con trols, intel lec tual prop erty rights and WTOreform. Šefčovič set a dead line of Octo ber for “tan gible res ults” on China’s sur pluswith the bloc.

“Des pite a three-month trade truce, the grow ing sur plus keeps the risk of a China-EU trade con flict elev ated,” said Larry Hu, chief China eco nom ist at Macquarie.

At a recent event in Beijing, a senior European dip lo mat praised the tone of thetalks as “bet ter than they have been in months, if not years”.

But in return, Beijing has its own demands. These include redu cing tar iffs onChinese elec tric vehicle imports and scrap ping con trols on exports of chip man u fac -tur ing machines from the Neth er lands’ ASML to China.

Rela tions with Brus sels also remain severely strained. EU lead ers last July wereforced to travel to Beijing to see Pres id ent Xi Jin ping for the 50th anniversary ofbilat eral rela tions, even though it was nom in ally China’s turn to visit Brus sels.

They held uncom fort able talks with Xi about the sur plus and Ukraine. By con trast,Beijing has since laid out the red car pet for vis its by Ger man Chan cel lor FriedrichMerz and Pedro Sánchez, Spain’s prime min is ter, among oth ers.

The for eign affairs min istry in Beijing insisted China and Europe are “part ners notrivals”. “China has always sup por ted the pro cess of European integ ra tion and iscom mit ted to devel op ing rela tions with EU insti tu tions and mem ber states on acom pre hens ive, bal anced, equal and mutu ally bene fi cial basis,” it said.

At the cor por ate level, though, many EU com pan ies are suf fer ing from China’sexport con trols on rare earths intro duced last year dur ing the trade war with theUS.

Željana Zovko, a centre-right mem ber of the European par lia ment’s trade com mit -tee, said mem ber states “are scared” of China. While they united to deal with USPres id ent Don ald Trump’s tar iffs, they will not do so against Beijing because theyare too depend ent on it for renew able tech no logy, crit ical min er als and cheapinputs. By con trast, Beijing has also become more assert ive after see ing off the US inlast year’s trade war, dip lo mats say.“We are so weak vis-à-vis China,” said Marie-Sophie Dib ling, a trade law yer at Cas -sidy Levy Kent in Brus sels. “They toy with mem ber states. They know exactly howto do things, they have this retali ation threat every time.”

China could also dir ectly tar get European com pan ies in its mar ket, said DGA’s Wut -tke. “If you want to be com pet it ive in chem istry, you have to be in China, becausethat is where the engin eers are. That is where the innov a tion is. And if you wantbasic ally to unlearn how to build cars and learn how to build mobile phones onwheels, you have to be in China,” he said, refer ring to elec tric vehicles. “So theyforce the entire sup ply chain . . . to be more Chinese and all of a sud den you haveChinese com pan ies with Ger man labels on them.”

Another area that China can lever age is its trad ing rela tion ships with coun tries onthe EU’s peri phery.

China com merce min is ter Wang spent three days in Lon don this month fol low inghis visit to Brus sels, hold ing what UK offi cials said were “extraordin ar ily con struct -ive” talks, espe cially on invest ment.

The cumu lat ive stock of Chinese invest ment in the UK reached nearly €85bn by lastyear, more than the next two largest EU recip i ents com bined, accord ing to datafrom Rho dium Group, a con sultancy. The UK has pre vi ously diverged from the EUon trade policy with China, not levy ing tar iffs on Chinese EVs, for example, whileBrus sels has imposed tar iffs of up to 45 per cent.

But Sam Good man, senior policy dir ector at the hawk ish China Stra tegic Risks Insti -tute, said that the UK gov ern ment was also seek ing to deepen trade ties with Brus -sels.

“Given the his toric inter linked indus trial sup ply chains between the UK and EU andthe aspir a tion in Lon don for an ambi tious reset in rela tions [after Brexit], it is hardto see how the UK will not even tu ally fall into line with the EU’s eco nomic secur itypolicies towards Beijing,” he said.

There are already some signs of move ment. The UK has matched the EU’s decisionto double steel tar iffs and halve tar iff-free quotas to tackle a global glut of the metal,mostly from China.

Brus sels is also con tend ing with a surge of Chinese invest ment in North Africancoun tries that have free trade deals with the EU. Morocco has been the largestrecip i ent, with $6bn announced since the pan demic, accord ing to Rho dium Groupdata — mostly in car industry sup ply chains that also serve EU com pan ies man u fac -tur ing in Morocco.Ulti mately, however, Beijing’s strategy would be to wait while EU mem ber statessquabble over how to deal with the sur pluses, ana lysts said. “Beijing has learnt thatEurope may com plain, but it can be coerced into delay,” wrote Andrew Small