EU protectionism can backfire, warn experts

Trade issues have become a flashpoint in relations between China and the European Union of late, with experts warning that the EU's shift toward protectionism, under the "de-risking" banner, could backfire, damaging its own global competitiveness.

Rather than erecting trade barriers, experts argue that the path forward lies in internal reforms and collaborative strategies that contribute to a mutually beneficial economic ecosystem for both sides.

There has been a noticeable increase in trade friction between China and Europe in recent months. ‌On May 29, after a meeting on China-EU relations, the European Commission defined the trade and investment dynamics with China as "not sustainable" and reaffirmed a strategy of "de-risking".

Since the beginning of the year, Europe has introduced a series of trade-restrictive measures, many of which are seen as erecting barriers against imports from China. These include the proposed revisions to the Cybersecurity Act, or CSA2, and the Industrial Accelerator Act, or IAA. Reports also suggest that the EU is considering stricter public procurement rules that would force companies to source from at least three different suppliers, with no single supplier accounting for more than 30 to 40 percent of critical components.

The China Council for the Promotion of International Trade has voiced firm opposition to the CSA2, stating that the draft introduces "nontechnical risk" factors, and directly links cybersecurity risks to companies from specific countries or specific national backgrounds, seeking to exclude them from relevant EU supply chains.

Sebastien Maillard, an associate fellow at Chatham House's Europe Programme, described the IAA as "some sort of sophisticated protectionism" for the EU's trading partners in an article on the think tank's website. He noted that "European discrimination is already introduced" in the bloc's new defense financing instrument, which limits the share of component costs from outside the EU, European Free Trade Association, or Ukraine to 35 percent.

Dong Yifan, an associate research fellow at the Institute of Country and Regional Studies at Beijing Language and Culture University, said that Europe's recent policy moves essentially use the so-called "de-risking" slogan as a cover for trade protectionism.

"These policy proposals, while not naming China explicitly, are largely aimed at Chinese companies. Once implemented, they will disrupt existing industrial and investment ties and effectively shut many Chinese companies out of the European market," Dong said. "This only serves to escalate tensions between China and the EU."

Experts pointed out that the EU's proposed measures could result in greater losses than gains for itself, both in terms of fostering competitiveness and adapting to technological changes.

A joint report issued by the China Chamber of Commerce to the EU and KPMG estimated that the CSA2 could cost nearly 367.8 billion euros ($428.22 billion) if it forces the replacement of Chinese suppliers across 18 critical sectors.

Dong said the EU, despite recognizing the risk of potential economic losses, continues to shape its policies through a lens of "pan-politicization and pan-securitization". This approach, he noted, is driven by an interplay of geopolitical concerns, anxieties over industrial competitiveness, and the so-called "de-risking" narrative.

"These factors create a self-reinforcing loop," he explained. "Labeling China as a geopolitical threat distorts the EU's perception of China's growing competitiveness and bilateral interdependence, increasing frictions and further entrenching Europe's biased views."

Jian Junbo, director of the Center for China-Europe Relations at Fudan University's Institute of International Studies, said the EU's concerns over China's trade surplus stem from structural shifts in bilateral trade that cannot be fixed through finger-pointing or confrontational policies.

For Europe, Jian argued, the real solution lies in boosting its own competitiveness through innovation and re-industrialization — not protectionism. "The EU needs to invest more in high-tech R&D, tackle energy challenges and reform labor markets to make 'Made in Europe' truly competitive again.

"From China's perspective, continuing its efforts to expand imports is a crucial step in demonstrating its responsibility as a major country. The China International Import Expo, held annually since 2018, and the Hainan Free Trade Port, for example, are signs of China's efforts to advance its opening-up. China remains a vital market for Europe and the globe, poised to continue to fuel global economic growth," Jian said.

According to Chinese customs data, in the first three quarters of 2025, China was already the top export destination for 79 countries and regions. For the full year, China imported a total of 18.48 trillion yuan ($2.72 trillion) in goods, keeping its share of global imports at around 10 percent. Notably, the EU is China's largest source of consumer goods imports, supplying more than half of China's cosmetics imports and nearly 60 percent of its car imports.

Jian stressed that resolving current trade disputes between China and the EU hinges on deeper collaboration, advocating for reciprocal investment and industrial integration to optimize trade structures. "Europe should welcome Chinese greenfield investments, which can boost local employment and upgrade industries, turning some 'Chinese exports' into 'European local production', thereby fundamentally improving trade figures.

"To this end, the EU must adopt a cautious approach to instruments such as investment screening mechanisms, and ensure a fair and transparent business environment. By fostering supply chain integration, both sides can form a stable community of shared interests, offering a more robust alternative to de-risking strategies," Jian said.