Europe’s largest and most influential independent think tank specializing in modern China, the Mercator Institute for China Studies (MERICS), has recently released a study pointing out that while China’s dependency on European imports has gradually decreased, Europe still holds significant collective influence in dealing with trade relations with China. It is now the opportune time to leverage this advantage to push China for concessions, or it may be too late.
The research reveals that China’s reliance on EU products is twice that of American products. The U.S. has long been able to use high-end semiconductors and other advanced technologies to pressure China into trade concessions, yet Europe is still struggling in negotiations with China over heavily subsidized Chinese imports, while watching Chinese goods threaten the survival of European businesses.
According to MERICS data, China is increasingly pursuing economic self-sufficiency, reducing its reliance on imports from Europe, and the window of opportunity for Europe to exert influence on China is closing.
Many of China’s products still have to be imported from the EU, with the EU’s product import dependency being twice that of the U.S. (China relies on the U.S. for 56 HS6 product categories in 2024). Excluding non-essential items like wigs, Europe is even more powerful in strategic goods such as pharmaceuticals.
MERICS has identified over 300 key economic or national security categories (including critical raw materials, dual-use items, semiconductors, and active pharmaceutical ingredients), among which in 2024, China relies on imports from the EU for 15 products, including hormones and steroids; alkaloids for pharmaceuticals and pesticides; vaccines; zirconium (corrosion-resistant metal used in nuclear industry and medical devices); gas turbines; certain machine tools; helicopters and airplanes.
In comparison, only three strategic products (borate salts used for nuclear coolants, fiberglass, and boron compounds for airplanes) are imported by China from the U.S.
Europe’s import dependency on Chinese products is also on the decline. For a long time, the EU’s dependency on Chinese products has been increasing, but this trend seems to have reached a critical point, with the categories of dependent products falling from a peak of 422 in 2022 to 411 in 2024. The number of EU’s strategic product dependencies on China peaked at 20 categories in 2022 and slightly decreased to 19 categories by 2024.
Currently, the EU’s strategic product dependencies on China still include graphite, fluorite, some antibiotics, amines, and heterocyclic compounds used as drug precursors. Although the EU imports a large amount of rare earths from China, international trade analysis data from the French economic think tank CEPII’s database (BACI) shows that Australia and Vietnam are also major exporters of rare earths, effectively reducing reliance on China. All of these data are of great significance to Europe.
Firstly, if the EU wishes to leverage its advantages in trade conflicts with China, now is the optimal time. Failure to act now may result in China reducing its reliance on the EU through measures such as domestic production substitution for imports.
The study indicates that as a primary tool for the EU to address economic threats, the Anti-Coercion Instrument (ACI) allows the EU to implement export controls and other measures. Streamlining the approval and negotiation processes could enable the EU Commission to take action independently, thus more effectively restricting exports of products upon which China depends.
Furthermore, to contain China, collective action by the EU is more potent than individual actions by EU countries. In the past, Germany has lagged in implementing tough trade measures, but it appears that Germany is now awakening. In July, the German government announced a plan to revitalize the German economy, advocating for protecting businesses from unfair competition and urging Europe to faster implement anti-dumping and anti-subsidy measures across various industries.