Dear Focus Reader,

This week, trade concerns came into focus as the United States and European Union took separate steps involving China, with European officials pressing Beijing over the growing EU trade deficit and the United States working with other economies to address structural excess capacity and production.

European Trade Commissioner Maroš Šefčovič met with Chinese Commerce Minister Wang Wentao to discuss trade imbalances and market access. The EU's goods trade deficit with China now exceeds €1 billion per day, while European officials are seeking greater access for European companies and measures to address rising Chinese exports. Šefčovič has said he is seeking "tangible results" ahead of an October 15–16 meeting of EU leaders, where trade relations with China are expected to be a central issue. China has rejected the EU's concerns as protectionist pressure.

Separately, trade ministers from 15 economies, including the United States, European Union and Japan, signed a U.S.-led statement calling for coordinated actions to address structure excess capacity and production and the "non-market" policies and practices that sustain them. The statement was agreed after G20 trade ministers in Milwaukee last week failed to reach consensus on the issue. China was among the G20 members that did not sign the statement and has rejected claims that its industrial policies have created excess capacity.

Washington has also slowed exports of some aircraft parts to China as the two sides negotiate over rare earths and other critical materials. The measures come as the tariff truce reached earlier this year has been extended through January 2027.

Meanwhile, on the AI front, the United States and China are working to establish a notification mechanism for incidents that could raise national security concerns. Treasury Secretary Scott Bessent said the mechanism would support greater transparency between the two countries and a "shared vision of common goals and common threats" as part of the new U.S.-China AI dialogue.

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