Europe is grappling with a renewed economic challenge from China that threatens to undermine local industries and lead to significant job losses. Trade experts warn that the current situation echoes the “China shock” experienced by the U.S. 25 years ago, when China’s entry into the World Trade Organization led to a surge in imports and the displacement of American jobs. Jens Eskelund, president of the European Chamber of Commerce in Beijing, highlighted that the issue extends beyond finished goods like electric vehicles, emphasizing the increasing dependency on Chinese components.
The European Union faces critical decisions as Chinese components become deeply integrated into its industrial framework. A recent Financial Times report suggests that the EU may require companies to source critical parts from at least three different suppliers to mitigate this dependency. European commissioners are set to meet on May 29 to discuss potential solutions. Oliver Richtberg, head of foreign trade at VDMA, praised Brussels for its proactive approach, though he criticized Berlin’s lack of engagement. Richtberg pointed out that while state subsidies make Chinese products cheaper, the undervaluation of the yuan against the euro is a more pressing concern, leaving European procurement teams with limited options.
This growing reliance on China is causing significant strain on European industries. Germany alone lost 22,000 jobs in its machinery sector last year, and the broader picture is equally concerning. A China trade analysis website reported alarming statistics: the EU imports 52% of its amino acids from China by value, and 88% by volume. In the case of polyhydric alcohols, 96% of imports come from China. The trade consultant behind the website warned that the real danger lies in the EU becoming dependent on low-cost Chinese imports, which could render local production unviable.
China’s trade surplus with the EU is expanding, with Germany particularly affected. China has become Germany’s top trading partner, and between 2024 and 2025, China’s trade surplus with Germany doubled to $25 billion. This shift has contributed to the loss of approximately 250,000 industrial jobs in Germany since 2019, with the automotive sector facing the steepest declines. Jens Eskelund expressed concerns over this growing dependency, noting that it could escalate from an economic issue to a security threat for Germany.
In response, the EU has proposed legislative measures, including the Industrial Accelerator Act and an update to the Cyber Security Act, to safeguard its industries. However, these measures are not expected to take effect until 2027, leaving the EU under pressure to find immediate solutions. Andrew Small from the European Council on Foreign Relations emphasized that the current tools employed by the EU are insufficient. He pointed out that while tariffs were a notable effort, they failed to address the imbalance. As the EU navigates this complex landscape, China is perceived to hold significant leverage, complicating efforts to counter its economic influence.