EU leaders race to settle China trade and budget deals before elections shift the odds

As European Union leaders opened two days of talks in Brussels on Thursday, the bloc was trying to settle positions on China, Ukraine and its next long-term budget before elections in several member states complicate the bargaining.

The pressure from China was visible in the trade figures. China’s surplus with the EU hit a record €360.6 billion in 2025, 15 percent higher than in 2024, then rose a further 10 percent in the first four months of this year.

Chinese hybrid-car exports to the EU rose from 3,800 vehicles in October 2024 to roughly 50,000 in July 2026. Industry groups say rising imports from China are contributing to an increasing number of factory closures across the bloc.

Less than a week before the summit, the European Commission agreed with Beijing to curb imports of Chinese hybrid cars.

At the same time, Maroš Šefčovič, the EU trade commissioner, met Wang Wentao, China’s commerce minister, in Beijing on Thursday (8 October) to discuss the growing trade imbalance. Šefčovič had sought tangible results from the dialogue by October in June, while Wang had assured him that existing Chinese controls on rare earths and permanent magnets would not disrupt EU supply chains.

Earlier dialogue set up working groups on the trade balance, export controls, intellectual property and World Trade Organization reform.

Friedrich Merz, the German chancellor, and Emmanuel Macron, the French president, have called for new EU measures against actions that distort markets. If the Beijing talks fail, Germany and France could press EU leaders for a cap on Chinese hybrid-car exports, preference for European vehicles in public procurement and tighter restrictions on Chinese takeovers of European companies.

Friday’s agenda was due to turn to further support for Ukraine, with Ukrainian President Volodymyr Zelenskyy set to attend the discussions.

The summit’s other difficult negotiation concerns the EU budget for 2028 to 2034, which covers agriculture, defence, competitiveness and migration. Leaders hope to find a compromise by the end of the year, though Merz and Macron hold different views on the package and three opposing camps are unhappy with the latest proposal.

The language has already shifted. The latest draft summit conclusions called for a ‘timely agreement’, replacing an earlier reference to a deal ‘by the end of the year’.

A special summit is planned for November in an effort to secure budget agreement.

Time is a central part of the calculation. Elections are looming in Italy, Poland, Greece, Finland and France, and the EU is concerned that eurosceptic gains could disrupt later negotiations and make a 2027 agreement much harder to reach.

Marine Le Pen, the far-right frontrunner in the French presidential vote, wants to cut France’s contribution to the EU budget as part of cost savings in the bloc’s second-biggest economy. On the eve of the summit, she said it would be a ‘democratic scandal’ for leaders to adopt a budget before next year’s votes.