The elephant is in the room. Rather, the dragon. No one in Brussels wants to mention it explicitly. Everyone is aware that this is an issue that seems already unavoidable. Terms and euphemisms are sought to gloss over it. From "dependencies" to "economic imbalances," a whole jargon has been composed to refer, in reality, to the Asian giant. The menu for this Thursday's upcoming summit of the Twenty-Seven consists of a double serving of Peking duck and liters of hot pot.
In a letter sent to the heads of State and Government prior to the meeting, the President of the European Council, António Costa, conveyed to his counterparts his intention to focus the meeting "on global macroeconomic imbalances and their implications for Europe's competitiveness and prosperity." The Portuguese wants to "achieve a common understanding" among Europeans on the challenges they face and guide the work of the European Commission in this regard. "Europe must do its economic work, but at the same time fair competition at a global level requires a level playing field," the leader maintains without explicitly mentioning China.
"It's not a debate about 'let's do this to China.' It's not a debate about China. It's a debate about global macroeconomic imbalances, so we will have to take everything into account, including the US component," clarifies a diplomatic source from Costa's cabinet. However, these same voices acknowledge that "there is a growing perception that the trade imbalances that all Member States currently have with China are unsustainable."
In the session, Member States will share with the European Commission their assessment of the situation with the intention of developing the basic elements for unity and discussing "what tools we have at our disposal to address these challenges," whether existing ones or new formulas that may be developed in the future. The capitals arrive at the session with the expectation that the President of the European Commission, Ursula von der Leyen, will present proposals on external competitiveness. "The important thing is to listen to Brussels," explain sources close to the Prime Minister, Pedro Sánchez.
Brussels' trade arsenal
Far from the usual caution of European institutions, national delegations are openly discussing the Community offensive against imbalances with the Asian giant. Officials finalizing the preparations for the meeting confirm that the European Commission is preparing a battery of trade measures that will be brought for discussion among leaders this week. Community sources admit privately that the results of the latest summits between the European Union and China are far from satisfactory and warn that there are still significant outstanding tasks in terms of trade diversification and reduction of strategic vulnerabilities.
The commissioners recently held an orientation debate in which they analyzed the diversification instruments available to Brussels, the use of safeguard measures such as tariffs and quotas, as well as specific actions aimed at combating market distortions caused by Chinese state-subsidized companies. "The Commission's overall approach remains risk reduction, not decoupling", is the mantra that Von der Leyen has repeated since then in practically all her public interventions on the matter.
From that meeting held in May, Brussels emerged with a clear conclusion: "as economic and security interests become increasingly intertwined, both dimensions will require a more robust and coherent response".
In this regard, the European Commissioner for Trade, Maroš Šefčovič, recently announced before the European Parliament that the bloc "should continue its work to increase the effectiveness of its trade defense policy", in addition to reinforcing its economic diversification strategy by leveraging the network of trade agreements signed by the Union. The underlying reflection no longer revolves solely around trade. There is growing concern in Community offices that economic dependence could become a strategic vulnerability. The debate, which just a few years ago was limited to industrial or manufacturing issues, has now extended to sensitive areas such as critical raw materials, telecommunications, artificial intelligence, semiconductors, or digital infrastructure.
Sánchez advocates for a pragmatic path
It will be precisely at this point where Sánchez will try to mark his own profile. In La Moncloa, they claim that, compared to positions considered more hawkish within the Union, Spain is committed to a more pragmatic approach.
In the opinion of the Spanish Executive, in a commercial context marked by tensions between Europe and the United States, simultaneously opening a new economic front with Beijing could be counterproductive to European interests. The socialist leader will defend during the debate the need to avoid an unnecessary escalation of tension. The government recalls that China maintains an enormous capacity for response and could adopt especially harsh retaliatory measures for certain strategic European sectors.
Therefore, sources close to the presidential environment consider that a "serious and structured" negotiation with Beijing could offer better results in a scenario where, for the first time, all countries in the bloc are already registering trade deficits with the Asian giant. "This is not sustainable," admit various community sources consulted.
For both Spain and the European Council's diplomatic teams, one of the fundamental keys will be to achieve broad political convergence when defining the European response. "There is growing convergence on the challenge we face. Whatever the major economic partner we are talking about, unity is essential. It has been in the past and will be in the future," summarizes a senior European official.
Impressions among the negotiators who will participate in the summit suggest that the debate on these macroeconomic imbalances "has matured a lot" in recent months. Therefore, Costa will convey to the leaders the idea that fair competition on a global scale requires a level playing field for all economic actors. "And some of these imbalances are clearly not sustainable," conclude European sources from the Schuman roundabout.
European Budget and Strategic Autonomy
It is expected that during the day the Twenty-Seven will also address other top-priority issues, among them the future community budget for the period 2028-2034, the well-known Multiannual Financial Framework. After having validated the legal architecture of the new budgetary model —including the system based on unique national plans—, the objective now is to move towards an agreement on the concrete figures before the end of the year.
The Cypriot presidency has proposed a cut close to 2% compared to the initial proposal of the European Commission, a possibility that countries like Spain flatly reject. The negotiation is particularly complex because it requires unanimity among the Member States.
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In principle, no formal written conclusions are expected on the Asian debate. The different delegations recognize that the expectation is for the Commission to present political guidelines and possible tools to develop in the medium and long term. These would include safeguard measures, reinforced commercial surveillance systems, investment control mechanisms, and more structural proposals, some of which have long been advocated by France.
The truth is that, over the last semester, the Community Executive has accelerated the presentation of initiatives aimed at reducing European strategic dependencies on third countries. These include the second European Chips Act, the reform of the European satellite framework, and the restrictions applied to certain technological devices linked to energy projects financed with community funds and manufactured mainly by the Huawei technology group.
The logic underlying all these initiatives is increasingly evident. Brussels considers that the future prosperity of the continent will largely depend on its ability to reduce external vulnerabilities, strengthen critical supply chains, and recover part of the industrial capacity lost during recent decades. Europeans seem determined to tear down their own invisible wall, the one that for years has limited the continent's economic takeoff. And to do so, more and more community leaders believe that one of the keys lies in finally addressing one of the most delicate structural dependencies of the European economy.
Because although no one wants to name it openly in official documents, although the conclusions are filled with diplomatic formulas and technical concepts, the great strategic debate that hovers over this summit has a proper name. And in Brussels, everyone knows that behind every reference to "global macroeconomic imbalances", every appeal to "level playing field", and every discussion about strategic autonomy, lies the same question: how to coexist with a China that is increasingly essential for the European economy and, at the same time, increasingly difficult to ignore as a geopolitical and commercial challenge.