EU Heads to China as Beijing Blocks Probe Into Chinese Takeover and Holds Europe's Rare Earth Supply

European Union officials are due to travel to China in the coming days as Brussels seeks progress in trade negotiations while tensions rise over Beijing's decision to block Chinese companies from cooperating with a European Commission investigation.

The talks come ahead of an October deadline set by the EU to seek a rebalancing of trade with China. The bloc's trade deficit with Beijing reached a record €1 billion ($1.16 billion or £855 million) a day in 2025, while Chinese customs data showed the imbalance continued to widen across much of the EU in July.

The dispute has been complicated by China's decision to prevent companies from assisting an EU investigation into Chinese e-commerce company JD.com and its proposed €2.5 billion ($2.9 billion or £2.13 billion) takeover of German electronics retailer Ceconomy. Beijing has described the investigation as an improper use of EU jurisdiction.

China Blocks Cooperation With EU Investigation

The European Commission opened an in-depth investigation into the proposed JD.com takeover under the Foreign Subsidies Regulation in May. The regulation allows Brussels to examine whether subsidies from non-EU governments have distorted competition within the European market.

China's Ministry of Justice said on 19 August that no organisation or individual should comply with or assist in what it described as the EU's unlawful extraterritorial measures. The ministry also warned that Beijing could take further action if the EU continued with what it considers unilateral measures.

The decision has added tension to negotiations that began in June. EU Trade Commissioner Maroš Šefčovič and Chinese Commerce Minister Wang Wentao agreed to establish a monitoring mechanism to exchange information and track trade flows, with the aim of improving transparency and managing trade disputes.

Brussels has continued its investigations despite the tensions and opened several anti-dumping cases over the summer.

Trade Imbalance Adds Pressure

Recent trade data have added to pressure on the EU to secure progress in its negotiations with Beijing. China's trade surplus increased with 24 of the bloc's 27 member states in July compared with the same month a year earlier.

Germany's trade deficit with China increased by 86.5%, while deficits also rose in Poland, the Netherlands, Spain and France, according to calculations based on Chinese customs data.

The figures have emerged alongside concerns about Chinese industrial capacity and state support for domestic companies. An OECD report published in June found that Chinese firms received, on average, between three and eight times more government support than firms in OECD countries between 2005 and 2024, depending on the region.

China has rejected accusations that its trade practices are unfair and criticised EU regulations that it says restrict Chinese companies' access to the European market.

Rare Earth Dependence Raises Stakes

Critical raw materials are another major concern for Brussels, with October also marking the end of a one-year truce over China's exports of rare earths, according to Euronews.

The agreement followed Beijing's decision to halt rare-earth exports during its trade war with the US, highlighting the potential impact of export restrictions on countries and industries dependent on Chinese supplies.

For the EU, securing continued access to these critical minerals is crucial. Rare earth elements are widely used in Europe's green technology, automotive and defence industries, making their supply an important part of the bloc's wider negotiations with Beijing.

European Commission President Ursula von der Leyen is expected to outline further trade measures in September, ahead of an EU leaders' summit in October.

The forthcoming visit to Beijing will therefore give EU officials another opportunity to seek progress before the deadline, with the JD.com investigation, widening trade imbalance and continued access to Chinese rare earths among the issues raising the stakes in the relationship.