German Push for More EU Action on China Risks Beijing’s Ire

Welcome to the Brussels Edition. I’m Suzanne Lynch, Bloomberg’s Brussels bureau chief, bringing you the latest from the EU each weekday. Make sure you’re signed up.

EU leaders meeting tomorrow at a Brussels summit will give their first reaction to last weekend’s deal to slash Chinese hybrid electric vehicles entering the EU market by more than half.

But already, many countries want the bloc to go further. As we report today, Germany will push for quotas on additional sectors, including chemicals, mechanical engineering and, potentially, pharmaceuticals. Berlin wants the commission to come up with the so-called safeguard measures by the end of the year.

EU economy minister Valdis Dombrovskis also opened the door to further measures from Brussels. “It’s clear that those economic and trade imbalances are not limited to automotive,” he told Bloomberg in an interview, referring to China. “We need to continue this work also across different other sectors.”

European Commission President Ursula von der Leyen’s top trade official Tomas Baert told a Brussels conference today that the EU still faces a structural imbalance with China, despite the car deal, and will consider what more can be done, Jorge Valero reports.

In reality, the decision to cap the number of hybrid vehicles coming from China to 350,000 impacts a fraction of the country’s €360 billion annual trade surplus with the EU.

The challenge facing Europe as it grapples with China’s manufacturing power was laid bare in new data overnight.

China’s trade surplus with the EU grew to $34 billion in September — a 21% increase compared to the previous year. In total, China reported a $940 billion trade surplus for the first nine months of the year, an 8% rise on the previous year, solidifying the country’s status as an export super power.

The prospect of fresh measures from Brussels risks the ire of Beijing.

“China reserves all rights to resort to dispute settlement and demand trade compensation within the WTO framework,” according to a statement on a social media account affiliated with the state broadcaster this week. “If the EU introduces new tricks while negotiating, China’s reserved measures will not be merely for show.”

The Latest

Commerzbank Chief Executive Officer Bettina Orlopp said UniCredit is set to get a crucial nod from the European Central Bank very soon, paving the way for the Italian lender to take control of its German rival. Italy’s Giorgia Meloni said her government was nearing an accord with the EU over a mechanism to cut the price of gas used to generate electricity, a move that would allow her to ease energy bills ahead of a national election next year.Portugal selected Lufthansa to buy a stake of as much as 44.9% in state-owned airline TAP, according to people familiar with the matter.The European Commission has proposed delaying its methane rules for importers by one-year in order to ease concerns over security of supply this winter, as previously reported.Slovakia’s parliament backed a budget for next year criticized by the opposition and fiscal watchdog as Prime Minister Robert Fico looks set to seek a fifth term in office.HalkTV, one of Turkey’s most-watched opposition television broadcasters, has been taken over by a government appointee after police raided its officers and arrested a well-known broadcaster.

Seen and Heard on Bloomberg

The European Central Bank will likely need to raise interest rates further, according to Governing Council member Pierre Wunsch. “We are probably going to have to hike again, but I’m not making any bet anymore because we have so much uncertainty on the energy front, maybe also AI,” the Belgian central-bank governor told Bloomberg Television on the sidelines of the IMF-World Bank meetings. “At the end of the day, it doesn’t really matter whether it’s October or December,” he added. “The market is pricing that we are going to have to do more.”

Market SnapshotASML Holding NV€1,518.60+0.6%Market data as of 09:00 AM ET. Data is subject to provider delays.

ASML shares rose after the Dutch company said soaring artificial intelligence spending means it’s searching for ways to produce more chip-making machines over the next two years. In an update Wednesday, the company said its current supply plans mean it won’t be able to fully meet demand in 2027 and 2028. ASML projected annual sales of between €44 billion ($49 billion) and €45 billion this year. The low end of the range was previously €43 billion.

Coming up

National Rally’s Marine Le Pen gives press conference this evening in BrusselsEU summit tomorrow in Brussels Ukrainian President Volodymyr Zelenskyy in London today

Final Thought

Swiss citizens are leaning toward rejecting an increase in the value-added tax to fund higher pensions, sending the government back to the drawing board on how to finance the measure. About 60% of respondents will probably or definitely vote against the proposal, according to a poll published Wednesday by newspaper group Tamedia/20 Minuten ahead of a Nov. 29 ballot.