Asia Economics Comment Regional implications of China-EU trade talks

Research evidence excerpt

Asia Economics Comment Regional implications of China-EU trade talks

30 June 2026

Asia Economics Comment Economics

Regional implications of China-EU trade talks Asia

◆ China-EU trade talks look set to deliver limited near-term progress; EU’s trade Frederic Neumann

deficit with China is around EUR1bn daily, and larger than the US’ with China ChiefGlobalAsiaResearchEconomist,Asia Co-head

The Hongkong and Shanghai

◆ For Asia, diverted Chinese exports could intensify price competition, squeeze Bankingfredericneumann@hsbc.com.hkCorporation Limited

margins, and raise “tariff cascade” risks, though it could also reignite ‘China+1’ +852 2822 4556

Justin Feng

◆ At the same time, Asian economies stand to gain from trade and investment Economist, Asia The Hongkong and Shanghai

diversification, especially by accelerating the ratification of FTAs Banking Corporation Limited justin.feng@hsbc.com.hk

+852 22887108

How is Asia affected if China and the EU cannot agree?

China’s Commerce Minister Wang Wentao and the EU’s Trade Commissioner Maroš Šefčovič met in

Brussels yesterday in a bid to ease escalating commercial tensions. In their first joint statement since

2019, the two sides agreed to set up a Trade and Investment Consultation Mechanism aimed at

addressing widening trade imbalances. Šefčovič said he expects the “first tangible results” by October,

when he is due to visit China.1

In recent months, the mood in EU policymaking circles has shifted from concern to something closer to

alarm over the bloc’s widening deficit with China.2 Last year, the EU ran a bilateral trade deficit of over

EUR360bn with China. Year-to-date in 2026, the gap is already 12% wider than at the same point last

year. On a 12-month rolling basis, the EU’s trade deficit with China is nearing EUR380bn, which