The EU’s Chinese October: From Partner to “Kill-Switch”

In a single week, Germany and France said that the European Commission should be armed with the power to cut trading partners off from Europe’s single market, the European Parliament adopted a tougher position on China, and the EU’s Trade Commissioner Maroš Šefčovič returned from Beijing with a cap on Chinese hybrids and a list of “shared understandings.” The EU’s rhetoric on China has never been sharper – but to what extent will it turn into actionable policy?

The October developments did not come out of the blue. Brussels and Beijing have been in trade negotiations since June, and Trade Commissioner Šefčovič warned over the summer that the EU expected Beijing to deliver tangible results by October. The EU’s trade deficit with China reached roughly €360 billion last year – or close to €1 billion a day – and the President of the EU Chamber of Commerce in Beijing even rhetorically asked why Europe should trade on such terms at all. China, meanwhile, placed 14 European entities under dual-use export controls in July, once again reminding the EU how quickly dependence turns into leverage, and how Beijing’s “tit-for-tat” responses might be symmetrical, but only on paper. By the end of September, Brussels and other EU capitals were thus bracing for a “make-or-break October.”

Paris and Berlin Ask for the “Kill-Switch”

One of the first messages of the month came from the EU’s two largest economies – Germany and France. In a joint letter to the European Commission President Ursula von der Leyen, Chancellor Merz and President Macron argued that the EU’s existing trade defense toolbox is too slow, too complex, and too dependent on member-state politics to deal with weaponized trade and systemic market distortions. One of the solutions they provided would be a new instrument allowing the Commission to restrict or completely cut off threatening trading partners from the EU’s single market – a mechanism referred to by the press as a “kill-switch,” or the EU’s equivalent of the American “Section 301,” which allows the US to respond to “unfair trade practices.”

On paper, the letter is “country agnostic,” names no country, and Germany and France insist the new tool should apply, if need be, to any problematic trading partner. Yet the letter’s list of grievances – dumping, subsidies, currency convertibility restrictions – sounds similar to the EU’s concerns about Beijing specifically. One of the most interesting elements, however, relates to EU procedures. Germany and France propose that the new tool should operate based on “reversed qualified majority,” meaning that measures would go ahead unless a qualified majority of member states votes to block them, rather than the other way around. Such a mechanism would strip individual capitals, especially those more lenient toward Beijing, of the ability to block decisive actions at the EU level.

Beijing Responds and Bargains

China’s response to the letter followed a familiar path. The Ministry of Foreign Affairs called for dialogue, while the Ministry of Commerce (MOFCOM) urged France and Germany not to push the EU toward protectionism, and not to “politicize and pan-securitize” economic issues, stating that such actions would ultimately backfire on the EU itself. MOFCOM had, in fact, issued a warning even before the letter was sent. In late September, reacting to media reports, it called the EU’s new potential tool a “typical protectionist and unilateral measure” and promised to “resolutely respond” to any discriminatory restrictions on Chinese companies, and defend China’s “legitmate interests.” 

The People’s Bank of China – the country’s central bank – joined the discussion on the very day Šefčovič arrived in Beijing, publishing a position paper that rejected claims of an undervalued yuan and insisted China has never engaged in competitive depreciation. The timing was not accidental. In June, Chancellor Merz assessed the yuan undervaluation at 30 percent, and called for “Plaza Accord talks” on Chinese currency. Beijing’s message was thus simple: the exchange rate is not up for negotiation, and a new Plaza Accord remains a distant European dream.

Nonetheless, the recent EU-China talks did produce a short list of “shared understandings.” The headline item concerned Chinese hybrid vehicles, which had not been included in the EU’s 2024 tariffs on EVs. The EU will limit hybrid imports to 350,000 vehicles in the first year of the cap, which will then rise by six percent annually over four years – a development Šefčovič presented as potentially cutting the EU’s hybrid imports from China by more than a half. MOFCOM told a different story. Its spokesperson stressed that the agreement builds “upward” from last year’s 302,000 vehicles and ensures “export space and stable growth” for Chinese companies, and added that China reserves the right to dispute settlements and seek trade compensation at the WTO level. Both interpretations have varying degrees of merit. The cap is indeed slightly higher than last year’s 302,000 hybrid vehicles sold, yet significantly harsher measured against the roughly 800,000 vehicles projected for this year. The differing interpretations show how each side intends to present the outcome at home. Still, as Šefčovič himself stated, the agreement is “a crucial first step – but only a first step” in the process of rebalancing.

From Partner to “Torture Chamber”

What sets this October apart from earlier EU-China tensions is the EU’s increasingly assertive language. As Finbarr Bermingham, Chief Europe Correspondent at the South China Morning Post, observed, the fact that terms such as “kill switch” and “torture chamber” are now being used to describe the EU’s China strategy suggests Europe has gone “through the looking glass.” In 2019, the EU saw China as a negotiating partner, economic competitor, and systemic rival all at once. In less than a decade, the Union has moved from “partner” to “kill-switch” and a “torture chamber” – a shift few would have predicted from a bloc long defined by its normative, consensus-seeking, and peaceful discourse.

The European Parliament has followed a similar trajectory. In a newly adopted China report, MEPs call Beijing a “decisive enabler” of Russia, describe its industrial policy as an “existential threat to the EU,” and express support for a continuous European naval presence around the Taiwan Strait. The text might be non-binding, but it is certainly quite telling.

None of this happens in isolation. Since Russia’s unjustified full-scale aggression against Ukraine in 2022, the EU’s politics and discourse have steadily hardened, alongside growing calls for rearmament, defense-industrial programs, reindustrialization, or economic security strategies. Trade with China, once the domain of technocrats and industry circles, now sits increasingly within the frame of security threats – right next to Russia’s efforts. And once policy is narrated through security and threats, the political cost of doing nothing rises significantly. 

A Turning Point, But to What Extent?

The difficult question is whether rhetoric will become law – and whether law will become action. At their summit in mid-October, EU leaders called on the Commission to “urgently enhance the EU toolbox with new instruments” and pushed for safeguards to shield the chemicals and machinery sectors from Chinese competition, while von der Leyen pledged to develop a new instrument limiting access to the single market “fast and immediately” where the EU’s interests require it. The proposal is expected in December, alongside a diversification instrument and a solidarity mechanism for those targeted by China’s retaliation. Any new tool would still require member state and European Parliament support – exactly where the EU’s China policy has historically lost momentum. For example, the Anti-Coercion Instrument, adopted in 2023 after Lithuania’s case, has never been triggered, even when EU leaders openly described China’s rare earth export controls as coercion. For now, the EU finds itself in a rare moment of unity, but endorsing summit conclusions is always easier than agreeing on who absorbs China’s potential retaliation. European industry, carmakers, and chemical companies may also cool on the idea once Chinese countermeasures start to bite.

Turning points are announced in Brussels fast, but confirmed slowly. What is certain is that the EU has never been this hawkish on China across its institutions, largest member states, and industry. Beijing, for its part, has shown it might concede on narrow, quantifiable issues to avoid broader measures while refusing to touch the structural drivers of its surplus, such as the currency. Whether October marks a genuine turning point will thus depend on whether the EU is actually prepared to press the “kill-switch” because as ever, the devil lies in the details – and in the implementation.