Europe is confronting a renewed “China shock” as concerns mount over the increasing reliance on Chinese imports, potentially leading to job losses and industrial dependency on Beijing. Trade experts highlight similarities to the “China shock” experienced by the US 25 years ago, when China’s entry into the World Trade Organization led to significant job displacement due to a surge in imports. Jens Eskelund, of the European Chamber of Commerce in Beijing, emphasized the critical issue of the volume of components imported from China, rather than just finished goods like electric vehicles, underscoring Europe’s growing dependency on Chinese imports.
As Chinese components become more integral to the European industrial framework, the EU faces tough decisions. Reports indicate that the EU is considering a mandate for companies to procure critical components from at least three different suppliers to mitigate risks. European commissioners are slated for urgent discussions on May 29 to strategize protective measures. Oliver Richtberg from VDMA praised Brussels for its proactive engagement but criticized Berlin’s approach. He pointed out that Chinese products benefit from state subsidies and favorable exchange rates, which have left the yuan significantly undervalued against the euro, presenting a challenge for European procurement.
Richtberg highlighted the dilemma faced by European manufacturers who opt for Chinese suppliers due to lower costs, despite the marginal quality difference. This trend has already led to a loss of 22,000 jobs in Germany’s machinery industry last year alone. A trade consultant’s analysis, conducted with the Mercator Institute for China Studies, revealed alarming data on the EU’s dependence on Chinese imports, particularly in sectors like amino acids and polyhydric alcohols. This reliance poses a risk of making EU production economically unviable, further cementing dependency on China.
China has emerged as Germany’s top trading partner, with trade figures indicating a growing surplus with the EU. The imbalance persists despite EU-imposed tariffs on Chinese electric vehicles, largely offset by exchange rate fluctuations. Andrew Small, from the European Council on Foreign Relations, noted that current EU measures are insufficient to address the scale of imports. With Germany’s industrial job losses since 2019 reaching 250,000, including significant declines in car manufacturing, the reliance on China raises existential concerns. Eskelund warned that this could evolve from an economic to a security issue for Germany.
In response, the EU is developing legislative measures such as the Industrial Accelerator Act and an updated Cyber Security Act, aimed at safeguarding industry. However, these will not be implemented until 2027, leaving immediate challenges unaddressed. Small emphasized the complexity of the situation, noting the political efforts required to impose tariffs, which fell short of correcting trade imbalances. As the EU navigates its response, the potential for a hostile reaction from Beijing looms, with China positioned to disrupt EU countermeasures to maintain its export flow.
