EU Leaders Meet in Brussels With China Exports, Energy Prices and a Budget Fight on the Table

BRUSSELS

European Union leaders gathered in Brussels on Thursday for a summit that was always going to be difficult, and by mid-morning it was living up to the billing. On the table at once: how to answer a flood of Chinese exports that European industry blames for factory closures, how to blunt high energy prices, and how to divide up a long-term budget that member states cannot agree on the size of, let alone the contents.

The meeting of the 27 member states comes less than a week after the European Commission reached an agreement with Beijing to limit imports of hybrid cars from China. EU officials describe that deal as a first step — a toehold in a much larger argument about a goods trade deficit with China that reached 360 billion euros in 2025 and is on course to pass that level this year.

The China imbalance is the summit's center of gravity

The imbalance is not confined to cars. It runs through chemicals, steel and machinery, and draft conclusions for the summit would have leaders ask the Commission to keep talking to Beijing while also making full use of the bloc's trade defence measures — and building new trade instruments on top of them. A senior EU diplomat, speaking ahead of the meeting, put the urgency plainly: the imbalances stretch across sectors, time is short, and every month of delay costs thousands of jobs.

Beijing's position is equally plain. Chinese officials have argued that talking up the imbalance is a pretext for protectionism, and for putting pressure on China rather than competing with it. The next formal EU-China meeting is not scheduled until March, which means whatever the leaders agree this week will have to carry the policy for months.

The sharpest sign of how far the mood has moved came from Germany. Europe's largest economy, long the bloc's most cautious voice on confronting Chinese imports, has shifted position. Franco-German proposals released last week call for urgent action on imports of chemicals and PET — the plastic used across packaging — and for tools that let the EU retaliate quickly against countries judged to be harming the bloc. An investigation into PET imports is expected to begin soon.

A budget fight with no quick deal in sight

If trade is the summit's headline, the budget is its grudge match. The EU's next seven-year budget, covering 2028 to 2034, finances everything from farm support and regional development to research, Ukraine assistance and the bloc's own administration. It must be agreed unanimously, which historically makes it the most acrimonious negotiation in European politics.

The Commission originally proposed 1.76 trillion euros. The Irish presidency of the EU has tabled a compromise cutting that to 1.62 trillion euros — and it satisfied almost no one. Sweden's prime minister, Ulf Kristersson, said on Thursday that his country will reject the Irish proposal. Net contributors including Germany, the Netherlands and the Nordic states say even the reduced figure is too much; countries that receive more than they pay in are pushing the other way. The Irish draft achieves its savings mostly by cutting what the EU spends beyond its borders and trimming the financial safety cushions in the budget, while also reducing money for research, climate action, clean transport and energy networks — and increasing support for farmers and rural areas, a constituency no leader wants to alienate.

Nobody in Brussels expects a deal this week. The summit's realistic output on the budget is a map of the disagreements, not a settlement of them, and the additional strain of high energy prices and rising defence spending on national budgets makes the arithmetic harder, not easier.

Markets are not waiting politely

European investors spent Thursday morning absorbing the same anxiety from a different direction. The pan-European STOXX 600 index fell early in the session as a global sell-off in technology shares — set off by hotter-than-expected American inflation data on Wednesday and renewed fears of further Federal Reserve rate increases — rippled into European trading. Technology stocks were among the hardest hit, a reminder of how exposed companies funding large artificial-intelligence build-outs with borrowed money remain to any shift in rate expectations.

Earnings offered partial relief. Ericsson rose sharply after reporting a smaller-than-expected drop in third-quarter core profit, helped by cost discipline that offset higher component costs. Pernod Ricard also gained after its first-quarter sales fell less than analysts had feared. But the broader mood — in the markets and in the summit rooms — is of a bloc being squeezed from several directions at once: expensive energy, expensive money, and a trade partner whose exports arrive faster than European factories can respond.

What happens next

The leaders' conclusions, expected as the summit wraps up, will set the Commission's marching orders on China for the months before the March meeting with Beijing, including whether new trade instruments move from draft language to real proposals. On the budget, expect the fight to roll on into the next summit cycle, with the Irish compromise as the text everyone argues against. For European readers opening their phones this morning, the honest summary is that the summit is the start of several arguments, not the end of any of them — but the direction on China, at least, has visibly changed, and Germany's shift is the reason why.

Thursday's other overnight developments are collected in our Nightly News Wrap-Up for October 15.