China Threatens to Launch Trade Probes Against the European Union — 2nd Update

Beijing threatened to launch trade probes against the European Union if the 27-member bloc pushes ahead with a proposal to curb imports of heavily subsidized foreign products.

Chinese authorities could initiate anti-discrimination and supply-chain security investigations into the EU's "overcapacity instrument," a social media account run by China's state broadcaster said Friday,citing unnamed sources.

If the EU advances the tool, China will take immediate action and deploy comprehensive countermeasures, it added.

The heating up of rhetoric comes ahead of European officials meeting for closely watched talks on Friday to discuss ramping up the bloc's trade defenses--a move widely seen as aimed at shielding critical industries from Chinese rivals.

European leaders hold the view that China's global industrial dominance is a result of decades of government subsidies and non-reciprocal market access. In a joint paper seen by Dow Jones Newswires foreshadowing the talks, five EU member states including France, Spain and the Netherlands called for the bloc's executive arm to launch more probes into potentially unfair trading practices, be proactive when disputing alleged breaches at the World Trade Organization, amend existing rules to prevent businesses from circumventing them, and allocate more resources to its trade policy unit to tackle a surge in investigations into dumping and subsidies.

The EU's industry chief, Stephane Sejourne, also told the Financial Times and other media outlets earlier this week that Brussels would broaden the use of its trade defenses such as import quotas and tariffs in a bid to shield European industries such as chemicals and clean technology from state-backed Chinese competitors.

After the commission's debate on Friday ended, the EU executive issued a statement saying that trade and investment relations with Beijing are not sustainable.

"China is a critical partner, and engagement and dialogue will continue. At the same time the current state of the trade and investment relationship is not sustainable," the commission said. "As economic and security interests become ever more intertwined, both dimensions will require a more robust and coherent response," it said, adding that the Friday discussions will feed into work in the coming weeks, ahead of a G7 meeting and a European Council summit in June.

Analysts say new safeguards could effectively serve as a sweeping new trade-defense mechanism against China, though policy measures are still under debate among EU member states.

By empowering Brussels to cap imports and impose sector-wide tariffs, the tool would target Chinese industrial exports in key markets like electric vehicles, steel, and solar panels, according to analysts.

Yuyuantantian, the state-run social media account, said the measure is specifically aimed at China even though the EU hasn't explicitly stated that.

"The EU's economic and trade policy toward China is going further and further down a radical path," it said, citing several EU moves this year including the Industrial Accelerator Act aimed at bolstering the bloc's industrial capacity.

Over the past few years, China and the EU have exchanged several rounds of tit-for-tat retaliation against each other's trade moves. Concerned that a flood of cheap Chinese products would crush European competitiveness, the EU has launched multiple investigations into Chinese companies.

--Xiao Xiao contributed to this article

Write to Singapore Editors at singaporeeditors@dowjones.com

(END) Dow Jones Newswires

May 29, 2026 09:36 ET (13:36 GMT)