EU Summit Grapples with Policy Toward China

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Zelenskyy to Attend as a Guest

On Thursday, EU leaders will first welcome Ukrainian President Volodymyr Zelenskyy. This is Zelenskyy’s first visit to the Belgian capital since his most prominent opponent within the EU, former Hungarian Prime Minister Viktor Orbán, was voted out of office in April. Since then, Hungary’s new government under Peter Magyar has lifted several vetoes against EU initiatives to support Ukraine—enabling formal accession negotiations to begin and a 90-billion-euro aid package to be approved.

How to Respond to China?

At a working dinner to follow, the focus will be on Europe’s competitiveness and global economic imbalances—and how Europe can respond to them. The main focus will be on China, which, with enormous state support, exports heavily, imports little, and generates record surpluses. Competition from China, where products are often cheaper, is putting pressure on European industry. With a new five-year plan, Beijing recently made it clear that China intends to continue supporting strategic sectors such as semiconductors and artificial intelligence.

There is broad agreement among EU member states that the current economic imbalance with China is problematic in the long term and that measures are necessary. At their meeting, top politicians plan to discuss how to respond and move forward. The Commission is also considering whether and how additional trade policy instruments should be created.

At their meeting on Wednesday in Évian, France, the leaders of the leading democratic economic powers (G7) already agreed to set caps on imports of certain raw materials in order to reduce the risk of being held hostage by countries such as China. The goal is to reduce dependence on individual suppliers outside the G7 and its partner countries for rare earths and permanent magnets to less than 60 percent by 2030, according to a joint statement. China dominates the global market for many of these raw materials but is not explicitly mentioned in the statement.

Budget Discussions on Friday

On Friday, the debate will focus on the EU’s new budget for the years 2028 through 2034. Heads of state and government face the challenge of meeting the EU’s growing financial and investment needs, while many member states are running on empty after years of successive crises.

The negotiations are likely to be tough: A compromise proposal presented last week by the Cypriot Council Presidency—which serves as a basis for discussion—calls for a two percent reduction in the 1.76 trillion euro budget proposed by the European Commission. From the German government’s perspective, this is far from sufficient; Berlin is calling for substantial cuts across the board. Other countries that, on balance, contribute more to the massive budget than they receive—such as the Netherlands and Sweden—also consider the proposal unacceptable. The current goal is to reach an agreement by the end of the year.

Finally, EU leaders are addressing the situation in the Middle East. The focus is on the recently reached preliminary agreement between the U.S. and Iran, which is intended to defuse the conflict between the two countries. According to mediator Pakistan, the framework agreement is now in effect after U.S. President Donald Trump and Iranian President Massud Peseschkian signed the deal.