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EU leaders left their June summit having agreed on the problem and stalled on the cure. Over two days in Brussels on 18-19 June, the 27 handed Ursula von der Leyen the political backing to develop new tools against Chinese industrial overcapacity. Unfair Chinese competition was one of the two dominant subjects on day one, alongside Ukraine and European defence.
Von der Leyen said afterwards that the Commission would develop a "diversification instrument" to push companies to cut their over-reliance on Chinese suppliers, and that work was advancing on a separate tool to use tariffs against China's industrial overcapacity. Leaders, she said, showed "unity and clear support for a European response," while insisting that dialogue with Beijing "remains crucial." Notably, she received no precise instructions on how many tools to build or how sharp they should be.
The most telling detail is what the leaders did not say. The official conclusions adopted on 19 June do not mention China once. Instead, they record that leaders held "a strategic debate on the issue of global macroeconomic imbalances" and called for "decisive progress on fostering Europe's industrial renewal and innovation and reducing dependencies, and on investment." The concrete decisions were pushed to the October European Council.
The euphemism is a map of the bloc's divisions. A paper circulated in late May by Spain, Italy, the Netherlands, France and Lithuania urged a tougher line on "systemic and structural industrial overcapacity" - Brussels shorthand for Beijing. Spain then withdrew its signature, having absorbed billions of euros of Chinese investment in digital and energy infrastructure. Germany, whose trade deficit with China is set to clear 100 billion euros this year and whose industry leans heavily on Chinese inputs, never signed at all.
For all the noise around Donald Trump's tariffs, EU officials increasingly see the trade deficit with China as the deeper, more systemic threat to Europe's economy. The Commission wants member states to back an overcapacity instrument that would stop China deliberately over-producing steel and a long list of other goods to depress prices and drive European rivals out of business.
Trade Commissioner Maros Sefcovic has been blunt about the stakes. He has called for a specific instrument to force companies to diversify suppliers, and singled out Morocco - now Africa's biggest carmaker after more than 6 billion dollars of Chinese investment in electric-vehicle plants - as a back door for Chinese overcapacity into the European market, describing it as a "big, big issue." Sefcovic hosts China's commerce minister in Brussels on 29 June, and the summit's signals are meant to stiffen his hand in those talks.
The economic hawkishness rides on a harder security mood. On 15 June, after a Foreign Affairs Council in Luxembourg, High Representative Kaja Kallas said the EU had verified that China's military trained Russian personnel who later fought in Ukraine - "hundreds" of troops across several locations in China, according to a senior EU official. Beijing dismissed the claim as "slander." Kallas has spent months pressing the bloc toward a tougher reckoning with China's role in enabling Russia's war.
Even Berlin is moving. Manfred Weber, the German leader of the centre-right EPP group in the European Parliament, warned that "either we fight back, or China will cripple parts of our industry," urging the EU to wield trade instruments "decisively and without hesitation." Germany has floated Plaza Accord-style talks on the value of the yuan - a sign of how far the mood has shifted in Europe's most China-dependent economy.
The summit captured Europe's China dilemma in miniature: broad agreement on the diagnosis, paralysis on the cure. Leaders know the trade deficit and overcapacity are existential for European industry, and they have given von der Leyen room to build the weapons. But by scrubbing China from the text and delaying the real choices to October, they showed how easily Beijing's targeted investments and Europe's internal splits can blunt collective action. The instruments now being drafted - the diversification and overcapacity tools - are the test. If they arrive with teeth, June will look like a turning point. If they arrive watered down, it will have been another debate kicked down the road. Either way, Sefcovic walks into the 29 June talks carrying a mandate the EU could not quite bring itself to write down.
