Brussels wants tangible progress on trade imbalances and market access, but surging summer demand for Chinese cooling units highlights the difficulty of reducing Europe's goods deficit with China.
The European Union is pressing China to deliver tangible progress on trade imbalances, export controls and market access by October, even as an historic heat wave is driving Europeans to buy more Chinese-made air conditioners and underscoring how hard it will be to narrow the bloc's deficit. The EU and China issued a joint statement on Monday and agreed to create a bilateral working group to monitor trade flows, while Beijing gave reassurance that existing export controls on rare earths and permanent magnets would not disrupt EU supply chains. European trade chief Maros Sefcovic said the current trend is "not sustainable" as Chinese exports to the EU keep rising while the bloc's market share in China shrinks. The EU's goods deficit with China increased 15% to €360 billion ($410 billion) last year and reached €98 billion in the first quarter, the highest since 2022. Analysts said Beijing's pledges fell short of any mechanism likely to materially reduce the surplus, even as the European Commission signaled that "the status quo is not an option." The tension is especially visible in air conditioning, where Europe remains underpenetrated and heavily reliant on Asian manufacturers. Midea Group's PortaSplit unit, designed to comply with Western Europe's fragmented building and product rules, reportedly topped 200,000 orders this year as of Monday. Chinese groups Haier, Gree and Midea together account for about 32% of the European market by retail volume in 2025, according to Euromonitor International, while none of Europe's five best-selling air-conditioner brands is owned in the EU. Analysts say that leaves Brussels balancing demand for cheaper Chinese consumer goods against the need to protect strategic industrial sectors and reduce dependencies in areas such as rare earths, chemicals, autos and heavy machinery.