ISPI (Pivot to Asia) ISPI - Italian Institute for International Political Studies
31 July 2025
THE EU-CHINA SUMMIT: A MIDSUMMER DEAL’S DREAM
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Expectations for the July 25 EU-China Summit were less than bright from the outset, especially after the meeting was scaled back from two days to just one. Relations between Beijing and Brussels have been strained for years and, while trade between the two sides continues, friction has been mounting. European industries are increasingly alarmed by China’s industrial overcapacity, which they fear could be dumped in the EU market to the detriment of local manufacturers, while concerns over the €300 billion trade deficit with Beijing continue to linger. At the same time, both China and the EU are suffering the consequences of the tariffs spiral, which has add ISPI (Pivot to Asia) ( ISPI - Italian Institute for International Political Studies
THE EU-CHINA SUMMIT: A MIDSUMMER DEAL’S DREAM
Image
Expectations for the July 25 EU-China Summit were less than bright from the outset, especially after the meeting was scaled back from two days to just one. Relations between Beijing and Brussels have been strained for years and, while trade between the two sides continues, friction has been mounting. European industries are increasingly alarmed by China’s industrial overcapacity, which they fear could be dumped in the EU market to the detriment of local manufacturers, while concerns over the €300 billion trade deficit with Beijing continue to linger. At the same time, both China and the EU are suffering the consequences of the tariffs spiral, which has ad ed further uncertainty for businesses on both sides. Against this backdrop, one of the underlying hopes for the summit was that Brussels and Beijing might find common ground and form a united front against Donald Trump’s aggressive trade agenda: During the first few months of the new Trump administration, China has sometimes appeared as a more reliable negotiating partner for Brussels than Washington itself. Yet, the outcome of the summit suggests that Europe and China are no closer to strategic alignment in the face of US pressure than they were before.
Why it matters
1. Few tangible results. The recent EU-China Summit delivered little in the way of concrete outcomes. On climate, both sides reaffirmed their existing commitments – more a restatement of intent than a breakthrough. Beijing also expressed its intention to accelerate the licensing process for European industries seeking access to critical raw materials, which nevertheless remain under export controls. While the very fact that Xi Jinping met with top EU leaders is in itself a positive signal, it falls short of offering real reassurance about the future of the relationship which overall remains uncertain. Pressing issues like China’s industrial overcapacity and Europe’s trade dependence continue to weigh heavily on bilateral ties, while the most contentious issue between China and the EU – Beijing’s close relationship with Russia – remains unresolved: Europe failed to push China to reconsider its stance, and Beijing showed no sign of shifting from its position.
2. Deepening distrust (even within the EU). Following the EU’s decision to impose tariffs on Chinese electric vehicles – a move that greatly angered Beijing – China retaliated with duties targeting European alcoholic beverages, as well as tighter export controls on critical raw materials. Against this backdrop, it is no surprise that mutual trust between Brussels and Beijing has sunk to new lows. The picture is further complicated by internal EU divisions over how to engage with China. Commission President Ursula von der Leyen faces growing scrutiny over her leadership, while member states remain split. Germany, with its strong automotive exports to China, and countries like Hungary and Slovakia, which host major Chinese manufacturing facilities, favor a more pragmatic approach aimed at avoiding further escalation and safeguarding Chinese investment. By contrast, France and other member states are pushing for a tougher stance focused on “de‑risking” and reducing strategic dependence on Beijing.
3. Overcapacity is the challenge. As expected, the brief summit between European and Chinese leaders failed to resolve one of the most contentious issues: China’s industrial overcapacity. European policymakers remain deeply concerned that an influx of heavily subsidized Chinese goods will flood the EU market at artificially low prices, undermining the competitiveness of European manufacturers. Yet even within China, this excess production is raising questions over the sustainability and the convenience of the subsidy policy. As of now, Beijing has shown little willingness to address the structural roots of the problem, leaving this issue as one of the biggest unresolved hurdles to EU–China relations. Still, the situation could change if it becomes less economically advantageous for China.
4. The US factor. In this web of overlapping interests, US trade policy – particularly under Donald Trump – casts a long shadow over the China–EU relationship. While at the beginning of Trump’s mandate, the new President’s all-encompassing antagonistic trade policy had made observers hope for a chance of a more united EU-China economic front, things have changed rapidly. The EU recently agreed to a 15% tariff deal with Washington on certain European goods, but many of other promises made during the recent encounter between von der Leyen and Trump remain vague or difficult to implement. This might leave Europe in a weaker position when negotiating with Beijing. China, meanwhile, has negotiated a lowering of tariffs to 30% and now appears to be the only player capable of engaging Trump on relatively equal terms. This dynamic further complicates Brussels’ efforts to secure meaningful concessions from Beijing, as both sides maneuver within a geopolitical landscape increasingly shaped by Washington.
Our take
The outcome of the summit stands in sharp contrast to the expectations of last February, when some observers in Europe perceived China as a potential counterweight, or even an alternative, to Donald Trump’s increasingly protectionist trade policies. That hope has now largely evaporated. The summit made clear that while China remains an important trading partner, it cannot replace Washington as a strategic anchor for Europe. After several setbacks – both with Beijing and in its fragile deal-making with Trump – Europe finds itself more isolated than ever in an increasingly fragmented global trade landscape. If there is any path toward rebalancing this dynamic, it may not lie in Brussels’ diplomacy with Beijing but within China itself. Should Beijing decide to address its deep structural problems – above all its industrial overcapacity in the face of weak demand – for the sake of its own socio-economic development, the EU–China economic relationship may shift to less conflictual ground. For now, however, such a transformation remains elusive.
Spotlight | Japan in uncharted territory
The recent House of Councillor election marks the end of the beginning of a new chapter in Japanese politics. The ruling coalition of the Liberal Democratic Party (LDP) and its junior ally Komeito lost the majority in the upper house of the Parliament, in a defeat that mirrors the one suffered last year when the coalition lost the snap election in the lower house. Prime Minister Shigeru Ishiba finds himself in the difficult position of relying on the opposition to ensure government stability, which in the coming months will prove to be a painstaking task given the widely different policy preferences, especially on fiscal matters. Yet, despite the parliamentary losses, the LDP remains the central actor in the Japanese political system and the slim margin of its defeat will likely allow it to continue to govern as it has done in the last few months: that is, pursuing a policy-by-policy collaboration with the individual opposition parties in order to deliver on governability but also to stir competition within the opposition. What’s far less certain, though, is the future of Ishiba himself. After the second electoral defeat in a row, his hold on power is shakier than he may be willing to admit regardless of his determination to stay in office.
Experts' Views
What do you believe is the European assessment of this year’s EU-China Summit?
The EU-China Summit started with a not-so-subtle protocol signal when Chinese officials decided not to provide EU leaders with individual cars but rather put them all on one bus. The leak from the Wang Yi – Kaja Kallas meeting in Brussels that Beijing did not want to see Russia lose in Ukraine, which is believed to have originated from Kallas herself, breaking diplomatic usage, clearly made an impact. The Summit confirmed deep differences between the two sides on trade, on the war in Ukraine and on human rights. The only joint statement that miraculously emerged from the event concerned climate change, but did not amount to much. Curiously, even the EU version of the statement consistently mentions China before the EU, and shows all the hallmarks of a document drafted by Chinese officials, rubber-stamped by the EU. The differences at EU-China level mean that trade and business arrangements will increasingly concern China and individual EU Member States that are friendlier to it. In a mistrustful strategic triangle, the EU seems to have chosen the US over China, with the trade deal announced in Scotland. However, the devil is in the details. All eyes will be on the US-China meeting in October.
Theresa Fallon, Centre for Russia Europe Asia Studies
What are the main takeaways for China after the summit with the EU leaders?
The year 2025 marks the 50th anniversary of the establishment of diplomatic relations between China and the EU. The 25th China-EU Summit, held in Beijing on July 24th, provided an important opportunity for the political leaders of both sides to review and look forward to the bilateral relations. In recent years, economic competition between China and the EU has intensified, and economic and trade frictions have become more frequent. Both sides urgently need to establish a new sustainable cooperation model. The summit sent a positive signal of adhering to dialogue and cooperation and properly managing differences, which should be the key element of the new model. In addition, the issuance of the “Joint Statement on Climate Change China-EU Summit” demonstrated the commitment of both sides to jointly taking on more global responsibilities. To address climate change, China and the EU need to engage in more pragmatic cooperation at technological and industrial levels in the future to seek new paths for win-win outcomes.
Sun Yanhong, Chinese Academy of Social Sciences
What and Where
Thailand-Cambodia tensions over disputed border escalated to full-fledged conflict
Between July 23 and 24, a new conflict broke out between Cambodia and Thailand in the area of the Hindu-Khmer Temple of Prasat Ta Muen Thom, along a border section that has been contested since the end of the colonial period. Tensions had erupted few weeks earlier, after two landmines killed six Thai military officers within a week.
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Edited by: Filippo Fasulo, Paola Morselli, Guido Alberto Casanova and Michele Danesi, ISPI
ISPI - Italian Institute for International Political Studies
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