Europe is facing growing concerns over a new “China shock” that analysts warn could accelerate deindustrialisation across the continent, threaten local manufacturing, and deepen dependence on Chinese imports.
Trade experts and industry representatives say the combination of heavily subsidised Chinese production, low-cost exports, and currency imbalances is placing severe pressure on European factories and supply chains. The concerns echo the original “China shock” experienced in the United States after China joined the World Trade Organization, a period linked to the loss of millions of industrial jobs due to rising imports.
Jens Eskelund, president of the European Chamber of Commerce in Beijing, warned that the issue extends far beyond finished goods such as electric vehicles. According to Eskelund, Europe is becoming increasingly dependent on Chinese-made industrial components embedded throughout the continent’s manufacturing sector.
The growing reliance on Chinese suppliers has prompted fresh discussions within the European Union over industrial resilience and supply chain security. European commissioners are expected to hold urgent talks later this month on possible measures to reduce strategic dependence, including proposals requiring companies to source critical components from multiple suppliers.
Industry groups argue that Chinese state subsidies and exchange rate distortions are allowing Chinese products to undercut European competitors. German economist Jürgen Matthes suggested that the yuan may be significantly undervalued against the euro, making Chinese imports dramatically cheaper for European buyers.
Oliver Richtberg, head of foreign trade at the European machinery and equipment manufacturing association VDMA, said European companies are increasingly choosing Chinese suppliers because they offer products at lower prices while approaching European quality standards. He warned that the trend is already damaging Europe’s industrial base and contributing to substantial job losses.
Recent data cited by trade analysts highlights Europe’s growing dependence on Chinese chemical and industrial products. In sectors such as amino acids and polyhydric alcohols, Chinese imports account for the overwhelming majority of EU supply volumes, raising concerns that domestic production may eventually become economically unviable.
Trade figures also show China’s surplus with the European Union continuing to expand. Analysts argue that tariffs imposed by the EU on Chinese electric vehicles in 2024 have been largely offset by exchange rate shifts and continued Chinese export growth.
Germany has been particularly affected, with estimates suggesting that around 250,000 industrial jobs have disappeared since 2019. The automotive sector has experienced some of the sharpest declines, while China recently overtook the United States as Germany’s largest trading partner.
Andrew Small, director of the Asia programme at the European Council on Foreign Relations, said existing EU measures are insufficient to address the scale of imports and industrial pressure facing Europe. He noted that while Brussels is preparing legislation such as the Industrial Accelerator Act and updates to cybersecurity rules aimed at limiting strategic dependence, most of the measures are unlikely to take effect before 2027.
Analysts say the EU now faces mounting pressure to introduce faster support mechanisms for European industry while balancing concerns over trade retaliation from Beijing. Environmental, industrial, and geopolitical debates surrounding Europe’s economic relationship with China are expected to intensify in the coming months.
