European policymakers are attempting to reduce economic reliance on China and bolster domestic industries, but face a delicate balancing act. China has already warned it will retaliate against any EU measures perceived as protectionist. This presents a “catch-22” scenario for the EU, as efforts to safeguard its economy could trigger a trade war. Officials acknowledge the challenge of expanding policy options while avoiding escalation with Beijing. The situation highlights the complex geopolitical and economic relationship between Europe and China. The EU is seeking ways to level the playing field without provoking a full-blown trade conflict, a task complicated by China’s assertive stance. This strategy involves a careful calibration of measures to address concerns about unfair competition and supply chain vulnerabilities.