Europe is grappling with a renewed “China shock” that threatens its industrial landscape and could lead to significant job losses, according to trade experts and industry representatives. This concern echoes the situation in the United States 25 years ago when China’s entry into the World Trade Organization led to a surge in imports that displaced local industries, resulting in the loss of millions of jobs. Jens Eskelund, president of the European Chamber of Commerce in Beijing, highlighted that the problem now lies in the massive influx of Chinese components, rather than finished goods like electric vehicles, making Europe increasingly reliant on China.
Faced with this growing dependency, the European Union is considering new measures to safeguard its industries. A report suggests that the EU might require companies to source critical components from multiple suppliers. Urgent discussions are scheduled among European commissioners to address these challenges. Oliver Richtberg, from the European machinery and equipment manufacturing industry, emphasized the role of state subsidies and currency fluctuations that have made Chinese products more affordable, putting European manufacturers at a disadvantage.
This dependency is starkly illustrated by the EU’s reliance on China for essential components. For instance, the EU imports over half of its amino acids and nearly all of its polyhydric alcohols from China. A trade consultant noted that the risk isn’t just about buying cheap inputs but rather how these low-priced supplies could render EU production economically unviable, increasing dependence on China. The trade imbalance is evident as China’s surplus with the EU grows, with Germany being significantly affected. Since 2019, Germany has lost approximately 250,000 industrial jobs, exacerbated by a sharp decline in the car manufacturing sector.
The EU has proposed legislative measures like the Industrial Accelerator Act and updates to the Cyber Security Act to protect its industries, but these won’t take effect until at least 2027. In the meantime, there’s pressure on Brussels to implement immediate solutions. Andrew Small of the European Council on Foreign Relations warns that China holds significant influence, as it can disrupt EU countermeasures while maintaining its export flow.
As Europe’s industrial sector faces mounting pressure, the strategic and economic implications of its dependency on Chinese imports are becoming increasingly concerning. Jens Eskelund warns that the ongoing trend of deindustrialization could evolve into a security issue for countries like Germany, which are experiencing significant job losses. The EU must navigate a complex landscape of trade relations and internal politics to address this pressing challenge while managing the anticipated backlash from Beijing.