Europe is pushing to narrow its record trade deficit with China by October, but a historic heat wave is driving unprecedented demand for Chinese-made air conditioners.
The European Union and China released a rare joint statement on Monday, aimed at rebalancing trade between the two economies and improving market access for both sides.
European trade chief Maros Sefcovic met with China’s Commerce Minister Wang Wentao and told reporters that disputes over trade imbalances, export controls, and intellectual property must deliver “tangible results” by October.
“Not everything will be solved, not everything will be fixed, but we think that between now and October, our teams have sufficient time to deliver the tangible results,” Sefcovic said.
Chinese exports to the EU “keep rising, while our market share in China keeps shrinking,” Sefcovic said, calling the trend “not sustainable” and warning that Beijing has not hesitated to signal retaliation against any new trade curbs.
The bloc’s goods deficit with China grew 15% to 360 billion euros last year, with all 27 member states experiencing a shortfall, and expanded to 98 billion euros in the first quarter, the highest since 2022.
Gabriel Wildau, managing director at consultancy Teneo, said the “sense of urgency over China’s threat to European industry appears to have reached a tipping point,” while China’s leadership has shown “little appetite for placating Europe.”
“There is no sign of policy action forceful enough to materially reduce the trade surplus with Europe,” Wildau noted, underscoring the deep skepticism analysts hold toward Beijing’s pledges.
Air conditioners are adding significantly to the trade imbalance this summer as Europeans scramble to cool their homes during an unprecedented stretch of brutal heat across the continent.
Midea Group reportedly said orders for its PortaSplit unit have topped 200,000 this year as of Monday, double the pace seen in 2025, with inventory tracking sites showing units largely out of stock across Germany.
Air-conditioning ownership in Europe stands at around 20% of households, far below the nearly 90% penetration rate in the United States, according to the International Energy Agency, a gap Asian manufacturers are racing to close.
None of Europe’s five best-selling air-conditioner brands is owned within the EU, with Chinese firms Haier Group, Gree Electric Appliances Inc. of Zhuhai, and Midea Group Co. together holding about 32% of the European market by retail volume in 2025, according to Euromonitor International.
Midea’s PortaSplit outdoor unit clips onto a window bracket without drilling and is classified as furniture rather than a fixture, sidestepping facade-modification bans in cities like Paris.
Alicia Garcia Herrero, chief economist at French investment bank Natixis, said China has made no real commitment in setting an actual import quota or implementation mechanism, calling the progress simply “smoke” from China to deter Europe from launching more protectionist measures.
Denis Depoux, global managing director at Roland Berger, warned that half of EU imports from China are technology products, saying “this is an inversion of the past decades and is scary for European industries, and can be a financial systemic problem for the Union.”
The European Commission said after Monday’s talks that “the status quo is not an option,” as Brussels restricts funding to solar projects using Chinese-made components and ends tax exemptions for low-value parcels used by companies like Temu and Shein.
Andrew Small, director at the European Council on Foreign Relations, said any measures would be “targeted in areas where either Chinese competition risks causing serious harm to critical industrial sectors, or where there is a major dependency risk that China may weaponize.”
“There is no discussion about across-the-board tariffs,” Small added, signaling that Brussels intends to pursue a calibrated rather than sweeping response to the growing imbalance.
Depoux argued that “delayed reciprocity” is the concept that should govern the relationship, one that could eventually see Chinese and European firms merge to compete globally rather than clash over market share.
