EU-China trade tensions collide with air-conditioner boom

Europe is looking to narrow its record trade deficit with China by October but the bloc’s worst-ever heatwave is driving unprecedented demand for imports of Chinese-made air conditioners; This is a fascinating story that shows how difficult it will be for Brussels to address the trade imbalance.

The European Union and China are in a rare joint statement It aimed to balance trade between the two economies and resolve market access issues on Monday.

Disputes over trade imbalances, export controls and intellectual property should yield “concrete results” by October, European trade chief Maros Sefcovic told reporters after meeting Chinese Trade Minister Wang Wentao. The two parties reached an agreement bilateral working group Monitoring trade flows with “assurances” from Beijing that current export controls on rare earths and permanent magnets will not disrupt EU supply chains.

“Not everything will be solved, not everything will be fixed, but we think that between now and October our teams have enough time to achieve concrete results,” Sefcovic said. he said. China’s exports to the EU “continue to grow, while our market share in China continues to shrink,” he said, adding that this trend is “not sustainable.”

Beijing has made it clear Feel free to retaliate against new trade restrictions It was designed to solve the problem of overcapacity.

But the timing is strange. The two met in Brussels during a historic heat wave that saw Europeans flocking to buy air conditioners mostly made in China. Europe has long resisted severe summer heat because it is relatively short-lived, making air conditioning noisy, conspicuous on architectural facades, and unnecessary. He also fears that widespread adoption of energy-hungry technology risks undermining the fight against climate change.

The bloc’s goods deficit with China Last year it rose 15% to €360 billion ($410 billion); All 27 member states experienced deficits, rising to €98 billion in the first quarter, the highest figure since 2022. Electrical equipment and machinery are among the most imported goods.

“The sense of urgency is gone [China’s] Gabriel Wildau, managing director of consultancy Teneo, said the threat to European industry appeared to have reached a tipping point, while China’s leadership showed “little appetite for appeasing Europe”.

“There is no sign of policy action strong enough to materially reduce the trade surplus with Europe,” Wildau said.

This summer, air conditioners also contribute to this imbalance.

Midea Group reportedly Orders for the PortaSplit unit, a portable split system designed according to Western Europe’s fragmented construction rules, surpassed 200,000 this year as of Monday, twice as fast as 2025, he said.

A. website It was developed by German software developer Adrian Kübel for real-time inventory tracking. midea Units across the country went viral on social media, showing that air conditioners were mostly out of stock.

In Europe, air conditioning ownership is found in about 20% of households, well below the nearly 90% penetration rate in the US. International Energy AgencyThere is a gap between Midea and Asian home appliance manufacturers SAMSUNG And Mitsubishi Electric They’re all racing to close.

None of Europe’s five best-selling air conditioner brands are from the EU. Haier Group, Gree Electrical Home Appliances Inc.. Zhuhai and Midea Group Co., all Chinese, hold about 32% of the European market in terms of retail volume in 2025, according to Euromonitor International. Türkiye’s Beko A.Ş. and Japan Daikin Industry Ltd. complete the top five.

Midea’s air conditioning design demonstrates the type of engineering designed to overcome Europe’s fragmented and layered regulatory and market barriers.

PortaSplit’s outdoor unit clips onto a window bracket, requires no drilling, and is classified as furniture rather than a fixture; thus avoiding façade renovation bans in cities such as Paris. The refrigerant charge is also limited to 1.99 kilograms. Just under France’s 2 kilogram limit.

The absence of a homegrown European name among leading air conditioning suppliers underlines the industrial gap that EU leaders are trying to address.

Denis Depoux, global managing director of Roland Berger, said half of the EU’s imports from China were technology products, from cars to advanced machinery. “This is a reversal of the past decades and is frightening for European industries and could be a financial systemic problem for the Union,” Depoux said. he said. He regarded the joint statement as positive progress, “because this is the first time in several years.”

The European Commission, which has long criticized the excessive subsidies Beijing uses to prop up its companies and claims it is dumping cheap goods into the bloc, said after talks on Monday: “The current situation is not an option.” The bloc has recently stepped up pressure on Chinese companies operating in Europe, restricting financing to solar projects using Chinese-made components. end of tax exemption For low value parcels used by companies such as Temu and Shein.

“Any measures will target areas where there is a risk of Chinese competition causing serious harm to critical industrial sectors or where there is a major risk of dependency that China could weaponize,” said Andrew Small, director of the European Council on Foreign Relations, focusing particularly on rare earths, chemicals, automobiles and heavy machinery. he said.

“There is no discussion about general tariffs,” he added.

For business in Europe, trade negotiations have existential consequences.

“Europe also needs a common understanding to prevent tit-for-tat reactions from escalating,” Depoux said. he said.

“‘Delayed reciprocity’ is the concept that needs to come into play here,” he added; This could eventually enable Chinese and European firms to unite to compete globally rather than clashing over market share, he added.