China, which makes more than half the world’s steel, is widely accused in Europe of dumping its production on world markets and violating trade agreements at the expense of local jobs.
“The EU will defend its steel industry. We are not defenceless, and we will use all the means at our disposal,” Juncker told reporters in Beijing.
He said there was a “clear link” between China cutting steel overcapacity and the EU granting it “market economy status” — a prize eagerly sought by Beijing.
China has been pressing the EU to grant it the status — which would make it harder for the bloc to levy anti-dumping tariffs — before the year’s end, citing World Trade Organisation rules.
Juncker said that the EU had “not made up its mind” on the matter, but would do so following an “impact assessment”.
Chinese steel exports to the EU rose 28 percent in the first quarter of this year, while prices dropped by more than 30 percent, he cited official statistics as saying.
The Commission chief spoke after an annual EU-China business summit, where he hailed a “new era of bilateral relations”, but added it “must take into account the importance of steel around the world”.
The EU, the second-biggest steel producer, has launched a dumping probe into Chinese steel. But angry manufacturers urge it to copy the US in introducing tough tariffs.
Beijing says reducing overcapacity and cutting state-subsidies to the steel sector are top priorities in its economic reform drive.
But foreign governments say they have seen little movement towards implementation.
Chinese Premier Li Keqiang defended his government to the summit, saying that overcapacity and falling commodity prices were not “triggered by any one country”.
“This requires us to all help each other,” he added.
European Trade Commissioner Cecilia Malmstrom said there was “urgent pressure” for China to curb its excess capacity at the annual meeting.
She called for non-viable companies to exit the market through bankruptcies, and the elimination of state subsidies.
“The overcapacity issue, particularly in the steel sector, needlessly pits workers in China and the European Union against each other,” she said. “The ultimate solution can only come from a more market-based approach.”