Yuyantan: If the EU Insists on Pushing 'Excess Capacity Tool', China Will Retaliate

Yuyuantan Tian, citing sources, stated that once the EU insists on promoting the "excess capacity tool" against China, China will immediately initiate comprehensive countermeasures, including launching an investigation against the EU for anti-discrimination and a security probe into supply chains. The Ministry of Commerce has made it clear that China is "neither unfamiliar with nor afraid of trade frictions, and will see it through to the end."

On the 29th, the European Commission will hold a meeting to discuss adjustments to economic and trade policies towards China. Prior to the meeting, several member states have submitted proposals, attempting to push for the so-called "resilience tool" - an "excess capacity tool" centered around import quotas and with taxes imposed on excess amounts. Although this mechanism does not explicitly name China, it is highly targeted in its design towards Chinese industries.

At the same time, the European Union has recently introduced a flurry of documents, including the revised draft of the Cyber Security Law and the Industrial Accelerator Act, marking the systematic solidification of trade protectionism into the EU's economic and trade policy framework with China.

The Structural Crisis Behind Protectionism

The root of the EU's shift lies in the continuous decline in the competitiveness of European industries in recent years. From 2022 to 2024, the growth rate of European industrial production fell from 0.3% to a year-on-year decrease of 2%. The surge in energy costs is a key factor, with European benchmark natural gas prices soaring more than 15 times in the summer of 2022 compared to the beginning of 2021.

The structural damage caused by high energy costs has not yet been repaired. In 2023, industrial electricity prices in the EU were about 158% higher than in the United States, and natural gas prices were about 345% higher, with this gap continuing to the present. High-energy-consuming industries are the first to be affected: data from the European Chemical Industry Council shows that between 2022 and 2025, the European chemical industry announced a cumulative shutdown of production capacity of 37 million tons, directly leading to the unemployment of about 20,000 people.

The situation in the aluminum industry is equally severe. Currently, the EU's annual primary aluminum production is only about 950,000 tons, while the annual consumption is as high as 13.5 million tons, with a structural gap of over 90%. The construction industry is also declining in tandem, with several energy-intensive industrial chains accelerating their disintegration.

Lobbying Forces Accelerate Policy Shift to the Right

Research from the China Financial 40 Forum points out that the expansion of the EU's trade deficit with China is not due to the "spillover" of Chinese production capacity, but rather a result of the upgrading of Chinese manufacturing and European energy constraints. However, the EU's policy orientation has chosen a different path.

A report from the European Council on Foreign Relations shows that the EU tends to replace long-cycle structural reforms with more aggressive confrontational measures. Relevant data reveals that within one year of the launch of the Clean Industry Agreement, lobbying activities surrounding it exceeded 750 instances, with the active entities not being new energy companies, but rather traditional heavy industry groups such as steel, automotive, energy, and cement.

Vice President of the European Commission, Sevillerné, who leads the Industrial Accelerator Act, is one of the most frequently lobbied targets. Analysis suggests that the acceleration of protectionist policies largely reflects the interests of traditional industry groups, rather than the strategic direction of the EU's overall economic transformation.

Sino-European Interdependence Creates a Balance of Power

It is worth noting that there is an inherent contradiction in the logic of the EU's accusations against China. France has been the largest source of China's cosmetic imports for three consecutive years, accounting for 29.6% of China's total cosmetic imports in 2025. EU exports to China of meat, alcohol, luxury goods, and other products also hold significant shares in China.

If "production exceeding domestic demand" is used as the basis for determining "excess capacity," the aforementioned European products also cannot escape this logical framework. Analysts believe that the high degree of interpenetration in Sino-European economic and trade relations serves as a constraint on both sides, and the cost of an aggressive protectionist route to the EU itself is also non-negligible."