Europe-China Trade Tensions to Escalate Over Manufacturing Competition, Warns EU Chamber President

Trade tensions between Europe and Beijing will escalate due to China's growing manufacturing ability in strategic industries, raising concerns about overcapacity and market disruption.

Amid the backdrop of China's burgeoning capabilities in manufacturing, trade tensions between Europe and Beijing are poised to heighten, forecasts Jens Eskelund, who serves as the president of the European Union Chamber of Commerce in China.

China's Strategic Emphasis on High-End Manufacturing

Chinese authorities are actively promoting high-end manufacturing as a means to bolster technological self-sufficiency and reduce the economy's reliance on real estate for growth. Consequently, investments and state financial backing for manufacturing have witnessed an upsurge, while the support for property has dwindled.

Eskelund highlighted concerns about overcapacity, especially in industries such as chemicals, metals, and electric vehicles. He emphasized the likelihood of impending market impact as the surplus manufacturing capacity comes online in the next few years.

Impact on European Industries and Trade Relations

Amid these developments, Eskelund underscored the need for an open dialogue between Europe and China to address the potential ramifications. He emphasized the risk of accelerated deindustrialization in Europe due to the externalization of low domestic demand in China.

The significance of the manufacturing sector in the EU cannot be overstated, as it accounts for nearly one-fifth of the employment and remains the largest contributor to the "business economy value added." Nevertheless, recent shifts in trading partnerships have seen Southeast Asia surpassing the EU as China's largest regional trading partner.

Challenges for European Businesses in China

A report co-authored by the European Union Chamber of Commerce in China and consultancy China Macro Group highlighted the growing political risks for European businesses operating in China. It pointed to the increasing difficulties faced by European businesses in light of broader U.S. actions and Beijing's response.

Notably, concerns about national security have led to export restrictions on Chinese companies' access to advanced semiconductor technology, as well as legislative efforts targeting popular social media app TikTok due to its Chinese ownership. Such developments have had a tangible impact on European businesses, with a cited example of a significant decline in market share over a decade.

Geopolitical Dynamics and Trade Imbalance

Another notable observation is the geopolitical predicament faced by European businesses, as they find themselves dependent on sourcing from China while encountering challenges in selling to the Chinese market. This has led to strategic diversification efforts, albeit with the recognition that it may entail a prolonged transition period.

Furthermore, the report highlighted the pricing disparities that hinder European businesses from competing with their Chinese counterparts in the domestic market. This has led to an imbalance in trade, with China increasingly exporting more goods to Europe compared to the reverse flow, signaling a concerning trend for European imports.

Share news

Copyright ©2025 All rights reserved | PrimeAi News

We use cookies to improve your browsing experience, offer personalized ads or content, and analyze our traffic. By clicking 'Accept', you consent to our use of cookies.

Cookies policy.