Europe is currently grappling with a new wave of economic challenges posed by China, which threatens to undermine local manufacturing industries and potentially lead to significant job losses across the continent. Analysts and industry representatives are drawing parallels to the so-called “China shock” experienced by the United States 25 years ago, when China’s entry into the World Trade Organization dramatically reshaped global trade dynamics. This historical period saw a surge in Chinese imports displacing American industries, resulting in the loss of millions of jobs. Jens Eskelund, president of the European Chamber of Commerce in Beijing, emphasizes that the current issue extends beyond the import of finished goods like electric vehicles; it’s the overwhelming influx of Chinese components that is deepening Europe’s reliance on China.
The European Union is faced with difficult decisions as Chinese components become increasingly integral to its industrial supply chain. Reports suggest that the EU is considering mandating companies to source critical components from at least three different suppliers. This comes as European commissioners prepare for urgent discussions on May 29, aimed at addressing these trade challenges. Although Brussels has been proactive in engaging with industry experts, Berlin has been criticized for not matching this level of involvement. The devaluation of the yuan against the euro over the past five years is compounding the issue, making Chinese products significantly cheaper and leaving European procurement managers with limited alternatives.
Rising concerns over the undervaluation of the yuan and state subsidies that make Chinese products more affordable are echoed by Oliver Richtberg, head of foreign trade at VDMA. He argues that the competitive pricing of Chinese products, often at 30-50% less than European counterparts, is a rational choice for businesses but poses a threat to local industries. In Germany, the machinery industry has already suffered substantial job losses, with 22,000 positions eliminated last year alone. Meanwhile, trade data reviewed by Soapbox, a China trade monitoring website, indicates a worrying trend of European industries being cannibalized by cheaper Chinese imports, especially in sectors such as amino acids and polyhydric alcohols.
China’s trade surplus with the EU continues to grow, with the balance of trade between China and Germany shifting dramatically. Between 2024 and 2025, China’s surplus with Germany doubled, highlighting the increasing dependency on Chinese imports. This trend has led to significant job losses in Germany’s industrial sector, particularly in car manufacturing. Jens Eskelund warns that the deepening reliance on China could evolve from an economic issue to a security concern, as more companies expand their presence in China. The EU has proposed legislative measures to protect its industries, such as the Industrial Accelerator Act and a revised Cyber Security Act, but these will not take effect until 2027, leaving policymakers under pressure to find more immediate solutions.
Former China adviser Andrew Small notes that the EU’s current measures are inadequate to address the scale of Chinese imports and that tariffs are unlikely to be a viable solution. Despite the EU’s efforts, China remains a dominant force in trade negotiations, often complicating countermeasures to maintain its export flow. As Europe seeks to balance its economic interests with the growing influence of China, the challenge remains to safeguard its industries without escalating tensions with Beijing.