Macron's China Visit Signals EU Trade Policy Shift, Impacts Airbus and India

French President Emmanuel Macron's recent diplomatic visit to China, accompanied by CEOs from major European firms like Airbus, initially appeared to be standard. However, beneath the cordial exchanges and cooperation agreements on nuclear energy and education, Macron delivered a stark ultimatum signaling a fundamental shift in European trade policy.

Europe faces a severe and growing trade imbalance with China, with the continent's trade deficit ballooning by nearly 60 percent since 2019. France alone experiences a $10 billion annual shortfall, importing significantly more from China than it exports. This imbalance is exacerbated by Chinese platforms exploiting EU customs rules, while China's technological advancements now see it producing its own passenger planes and leading in critical sectors like electric vehicles and batteries. Macron explicitly warned Chinese officials that Europe would impose tariffs, similar to those in America, unless the trade imbalance is addressed, stating that China was "killing their own customers" with unsustainable export surpluses.

For China, losing access to Europe's vast market of 27 countries and hundreds of millions of consumers is a significant risk, especially given existing American tariffs and EU investigations into dumping practices. Despite President Xi Jinping's call for China and France to chart their own course, no major business deals materialized from the visit. Notably, the anticipated multi-billion dollar Airbus order did not proceed, likely as China uses aircraft purchases as leverage in broader negotiations with the United States over Boeing. This visit underscores a fragmenting global order where trade is intrinsically linked to geopolitical power, presenting opportunities for countries like India to diversify supply chains away from China as Europe seeks strategic independence.