EU-China trade tensions collide with air-conditioner boom
PARIS, FRANCE – JUNE 24: Pedestrians use umbrellas to shield from the sun as record-breaking high temperatures continue in Paris on June 24, 2026 in Paris, France.
Li Yang | China News Service | Getty Images
Europe wants to narrow its record trade deficit with China by October, but the bloc’s worst-ever heat wave is driving unprecedented demand for imports of Chinese-made air conditioners, a telling tale illustrating how hard it will be for Brussels to address the trade imbalance.
The European Union and China released a rare joint statement on Monday aimed at balancing trade between the two economies and addressing market access issues.
Disputes over trade imbalances, export controls and intellectual property must deliver “tangible results” by October, European trade chief Maros Sefcovic told reporters after meeting with China’s Commerce Minister Wang Wentao. The two sides agreed to set up a bilateral working group to monitor trade flows, with “reassurance” from Beijing that existing 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 sufficient time to deliver the tangible results,” Sefcovic said. Chinese exports to the EU “keep rising, while our market share in China keeps shrinking,” he said, calling the trend “not sustainable.”
Beijing has made it clear that it would not hesitate to retaliate against any new trade curbs designed to tackle the overcapacity issue.
But the timing is awkward. The pair met in Brussels just as an historic heat wave has Europeans rushing to buy air conditioners — mostly made in China. Europe has long resisted air conditioning as noisy, an eyesore on architectural facades and unnecessary, as brutal summer heat has been relatively short-lived. It also fears widespread adoption of the energy-hungry technology risks undermining the fight against climate change.
The bloc’s goods deficit with China grew 15% to €360 billion ($410 billion) last year, with all 27 member states experiencing a shortfall, and expanded to €98 billion in the first quarter, the highest since 2022. Electrical equipment and machines are among the most imported goods.
“The sense of urgency over [China’s] threat to European industry appears to have reached a tipping point,” said Gabriel Wildau, managing director at consultancy Teneo, 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.
A big market to fill
Air conditioners are adding to that imbalance this summer.
Midea Group reportedly said orders for its PortaSplit unit — a portable split system engineered for Western Europe’s fragmented building rules — have topped 200,000 this year as of Monday, double 2025’s pace.
A website built by German software developer Adrian Kübel to track real-time inventory of Midea units across the country went viral on social media and showed the air conditioners were mostly out of stock.
Air-conditioning ownership in Europe stands at around 20% of households, far below the nearly 90% penetration rate in the U.S., according to the International Energy Agency, a gap Midea and Asian home appliance makers Samsung and Mitsubishi Electric are all racing to close.
None of Europe’s five best-selling air-conditioner brands is owned in the EU. Haier Group, Gree Electric Appliances Inc. of Zhuhai and Midea Group Co. — all Chinese — together hold about 32% of the European market by retail volume in 2025, according to Euromonitor International. Turkey’s Beko Corp. and Japan’s Daikin Industries Ltd. round out the top five.
Midea’s air-conditioning design illustrates the kind of engineering tailored to crack Europe’s fragmented and layered regulatory and market barriers.
PortaSplit’s outdoor unit clips onto a window bracket, needs no drilling, and is classified as furniture rather than a fixture — sidestepping facade-modification bans in cities like Paris. Its refrigerant charge is also capped at 1.99 kilograms, just under France’s 2-kilogram limit.
The absence of a homegrown European name among leading air-conditioning suppliers underscores the industrial gap that EU leaders are trying to address.
Half of the EU’s imports from China are technology products, from cars to sophisticated machinery, said Denis Depoux, global managing director at Roland Berger. “This is an inversion of the past decades and is scary for European industries, and can be a financial systemic problem for the Union,” Depoux said. He acknowledged the joint statement as positive progress, as “it is the first one in several years.”
Brussels’ balancing act
The soaring demand for Chinese-made cooling technology also reflects an economic reality underlying analysts’ skepticism that Beijing has conceded much in trade talks, as Brussels struggles to boost its own exports.
“China has made no real commitment in setting an actual [import] quota or actual implementation mechanism,” said Alicia García Herrero, chief economist at French investment bank Natixis, calling the progress simply “smoke” from China to deter Europe from launching more protectionist measures.
European leaders are balancing consumers’ desire for cheaper Chinese household goods, such as air conditioners, and maintaining their industrial inputs in strategic categories and employment.
The European Commission, known for its criticism of Beijing’s excessive subsidies to support its companies and alleged dumping of cheap goods in the bloc, stated after discussions on Monday that maintaining “the status quo is not an option.” Recently, the bloc has intensified its scrutiny of Chinese companies in Europe, such as limiting funding for solar projects using Chinese-made components and removing a tax exemption for low-value parcels utilized by companies like Temu and Shein.
“Any actions taken would be focused on areas where Chinese competition poses a significant threat to critical industrial sectors, or where there is a high risk of dependency that China may exploit,” explained Andrew Small, director at the European Council on Foreign Relations, highlighting rare earths, chemicals, autos, and heavy machinery.
“There is no consideration of blanket tariffs,” he emphasized.
Trade negotiations in Europe hold immense importance for businesses, as they can have far-reaching implications.
“Europe must reach a common understanding to prevent an escalation of retaliatory measures,” Depoux emphasized.
“‘Delayed reciprocity’ should be the guiding principle here” — a concept that could lead to potential mergers between Chinese and European firms to compete globally rather than engaging in market share battles, he suggested.
