China's imports from the European Union fell 1.3% in May, the first decline in three months, deepening a trade imbalance that now exceeds $30 billion. While exports to the bloc grew 7.6%, the slowest pace since October, the surplus has intensified calls for EU restrictions on Chinese goods.

Beijing has threatened retaliation if the EU imposes new trade barriers, escalating tensions that complicate efforts to forge a unified stance on China among Group of Seven nations. French President Emmanuel Macron is set to host a video call addressing global trade imbalances, highlighting mounting European concerns over the lopsided relationship.

The decline was concentrated in Germany, where imports plummeted 6.2%, reversing two months of gains. French purchases rose 24%, and Dutch imports expanded 8.8%. The uneven pattern underscores China's diversified sourcing strategy amid growing scrutiny of its trade practices.

An escalation could jeopardize China's "new three" priority sectors: solar, electric vehicles and lithium-ion batteries, which account for 40% of EU-bound exports in each category, according to HSBC. The bank warns that prolonged friction poses a material risk to these industries' growth trajectory.