In a world where China is growing off the back of net exports, this is a powerful deterrent. So France and Germany are right to buttress the flurry of forthcoming trade measures with a second strike option in case China retaliates outside the rules.

🇫🇷🇩🇪present united front on how to empower 🇪🇺to better deal with Chinese trade practices threatening Europe's industrial base.

Trade javelin?

The piece is auf Deutsch, and builds on my remarks for Germanys state visit to the Netherlands. So it focuses on what Germany and the Netherlands, as two of the most integrated economies in the world (boasting terrifying fiscal firepower between the two of em) can do to build economic sovereignty.

The piece builds on the interwoven nature of the Dutch and German economies, to argue Europe needs both tougher defences against the superpowers and deeper partnerships elsewhere.

So member-states backing serious trade defence could give Sefcovic a real set of arguments. Some have argued the world should wait patiently for China to adjust, giving it a god-given right to export-led growth at Europes expense. I don’t think Merz and Macron agree. 6/6

So: Beijing may offer symbolic concessions to defuse tensions, but Id be surprised to see voluntary export restrictions large enough to materially change the trade picture. China could also offer to open its market more but it’s now so oversupplied it won’t move the dial. 5/

So I doubt Beijing will accept meaningful restraint in the sectors that really matter — cars, machinery, chemicals. China perceives Europe as weak and is playing for time to stall Europe shielding its market - read I.e: “China shock 2.0 is opportunity 2.0” 4/

With domestic demand continuing to sag, net exports are keeping the Chinese economy afloat. China will generate another 1.5pp of GDP growth in both 2026 and 2027 from exports. The key and largest enabler market for Chinas export led growth is obviously Europe. 3/

Brussels is hoping Beijing will agree to voluntary export restraint, because the alternative is deploying trade defences that risk triggering a harsher confrontation with China. Hope is never a good plan. 2/

China isn’t going to easily agree to curb its export glut. Franco-German backing for an ambitious response gives Commissioner Sefcovic some much needed leverage in his negotiations with China, ahead of the October deadline. 1/

France and Germany are not sitting idly in the face of China shock 2.0. There’s space for rules-compliant measures: a flurry of CVDs, including on hybrids and safeguards. But Paris and Berlin are, rightly, thinking of deterrence in case Beijing retaliates outside of the rules.

?

The contrast with the refill-gas-storages-at-any-price approach of '22-23 is striking, reflecting that Europe now has far more infrastructure to import LNG at the 11th hour But room for setbacks - say, a harsh winter combined with unforeseen maintenance on pipelines from Norway - is limited. 3/