Europe is grappling with a renewed economic challenge from China that threatens local manufacturing jobs and could lead to increased industrial control by Beijing, according to trade experts. This situation mirrors the “China shock” experienced by the U.S. 25 years ago, which saw Chinese imports displacing local industries after China joined the World Trade Organization. Jens Eskelund, president of the European Chamber of Commerce in Beijing, highlighted that the issue is not only with finished goods like electric vehicles but also with the vast volume of components imported from China, making Europe more reliant on Chinese imports.
The European Union faces critical decisions as Chinese components become more integrated into its industrial sector. Reports indicate that the EU is considering a requirement for companies to source critical components from at least three different suppliers. Urgent discussions among European commissioners are scheduled for May 29 to explore potential measures. Oliver Richtberg from VDMA, representing the machinery and equipment manufacturing industry, praised Brussels for its proactive approach but noted that the undervalued yuan, estimated to be 40% lower against the euro over the past five years, complicates the situation, leaving European procurement officers with limited options.
The trade imbalance is stark, with China now Germany’s top trading partner, surpassing the U.S. Chinese imports have surged, doubling China’s trade surplus with Germany from $12 billion to $25 billion between 2024 and 2025, leading to an estimated loss of 250,000 industrial jobs in Germany since 2019. This includes a significant decline in car manufacturing jobs. Andrew Small, director of the Asia program at the European Council on Foreign Relations, noted that current EU measures are insufficient to address the import levels, emphasizing China’s growing influence in the European market.
In response, the EU has proposed two legislative measures: the Industrial Accelerator Act and an update to the Cyber Security Act of 2019. These proposals aim to protect European industry but will not take effect until 2027, prompting calls for immediate solutions. However, Small cautioned against relying solely on tariffs, citing the political challenges involved in implementing them. Meanwhile, Beijing remains strategically poised, with the ability to complicate any EU attempts to curb Chinese exports, further underscoring China’s influential position in this economic dynamic.