Europe is grappling with a renewed “China shock,” posing a significant threat to its local manufacturing sector and potentially leading to job losses and increased dependence on Chinese industry, according to trade analysts and industry representatives. The situation mirrors the crisis faced by the US 25 years ago, when China’s entry into the global trade arena led to substantial job displacement. Jens Eskelund, president of the European Chamber of Commerce in Beijing, highlighted the growing reliance on Chinese components rather than finished goods, which is deepening Europe’s dependency on China. As a response, the EU is contemplating measures such as requiring companies to source critical components from multiple suppliers.
The European Commission is scheduled for urgent discussions on May 29 to address the challenges posed by the influx of Chinese components. Oliver Richtberg, a leader in the European machinery and equipment manufacturing sector, acknowledged Brussels’ proactive stance but expressed concerns over Berlin’s lack of engagement. He pointed out that state subsidies and exchange rate fluctuations have made Chinese products more affordable, creating a competitive disadvantage for European manufacturers. This has led to significant job losses, with Germany’s machinery industry losing 22,000 jobs last year alone.
Data from a China trade watch website indicates a worrying trend of industrial cannibalization, with the EU heavily reliant on Chinese imports for products like amino acids and polyhydric alcohols. This dependency threatens the economic viability of EU production. The trade imbalance is stark, as China has become Germany’s top trading partner, with a surplus that has doubled between 2024 and 2025. Consequently, Germany has experienced a loss of 250,000 industrial jobs since 2019, particularly in the car manufacturing sector.
As the EU seeks to safeguard its industrial sectors, it has proposed legislative measures such as the Industrial Accelerator Act and updates to the Cyber Security Act. However, these will not be effective until 2027, prompting the need for immediate solutions. The current tools, such as tariffs, have not adequately addressed the imbalance, and there is hesitancy to repeat the political effort required to implement them. Amid these challenges, China remains influential, capable of disrupting EU countermeasures while maintaining its export flow.
The growing reliance on Chinese imports poses an existential threat, with potential security implications for countries like Germany. Jens Eskelund noted that many European businesses are expanding their presence in China, exacerbating the issue. The situation requires urgent attention from EU member states to counter the adverse effects on European industry and employment.