Chinas Ministry of Commerce on 1 January 2026 issued a detailed rebuttal of the European Unions newly implemented Carbon Border Adjustment Mechanism (CBAM), saying the EUs rules punish Chinese exporters and risk distorting international trade. The ministry said the EUs approach ignores Chinas progress on green and low carbon development and imposes default carbon intensity values that are significantly higher than Chinas actual levels.
EU Carbon Border Adjustment Mechanism Raises Trade Concerns
The ministry noted that the EU has not only set what China calls biased baseline values but also plans to raise those values year on year for the next three years. That, Beijing said, would create “unfair and discriminatory treatment” of Chinese products and does not reflect national circumstances or development stage. China argued the measure contravenes core World Trade Organization principles such as most-favoured-nation and national treatment.
Officials also criticised a fresh EU legislative proposal to broaden the CBAM from primary commodities to about 180 downstream products by 2028, including machinery, automobiles and household appliances. The ministry said this expansion moves beyond climate policy into trade management, carrying the hallmarks of protectionism and unilateralism.
Chinas statement highlighted a further inconsistency it sees in EU policy. It pointed to recent changes to the EUs 2035 internal ban on sales of new internal combustion engine vehicles, arguing that the bloc is loosening domestic green regulation while imposing stricter requirements on external suppliers. The ministry described that as a double standard and said it undermines trust in international climate governance.
Beijing framed its objections in legal and diplomatic terms. The ministry invoked the United Nations Framework Convention on Climate Change principle of common but differentiated responsibilities, saying the EUs CBAM ignores historical emissions and differing development paths. It warned that exporting rich countries regulatory standards onto developing economies increases the cost of climate action for those economies and risks generating conflicts between trade and climate rules.
At the same time, the ministry made clear that China remains willing to cooperate with the EU on global climate challenges. It urged the EU to adhere to established international rules, to pursue policies that are fair, scientific and non-discriminatory, and to keep markets open to trade and investment in green sectors. The statement said China will, however, defend its legitimate interests and the rights of its firms, and will take all necessary measures to respond to any unjust trade restrictions.
Trade analysts say the confrontation reflects broader tensions between major economies as they synchronise climate policy with industrial strategy. Expansion of CBAM coverage to downstream goods could affect global value chains, raising compliance costs and prompting relocation or legal challenges. Beijings warning signals that affected exporters and supply chains should prepare for regulatory friction and possible countermeasures.
For now, the dispute centres on the coming months as the EU implements CBAM and as China assesses impact and potential responses. Observers expect continued diplomatic engagement, in part to seek rules that balance climate ambition with predictable trade relations, and in part to avoid measures that could escalate into reciprocal barriers harming global supply chains.
Key Takeaways:
- China warns the EU CBAM sets biased default carbon intensities that unfairly target Chinese products.
- Beijing says EU proposals risk protectionism and may breach WTO and UNFCCC principles.
- The EU plan to extend CBAM to downstream goods from 2028 raises concerns over trade distortion.
- China pledges cooperation on climate action but will take necessary measures to protect its industries and supply chains.
