Europe is grappling with a new “China shock” as the influx of Chinese components into local industries threatens factory jobs and raises fears of economic dependency on Beijing. Trade experts warn that this scenario echoes the crisis the U.S. experienced about 25 years ago when China’s entry into the World Trade Organization led to soaring imports and the loss of millions of American jobs. Jens Eskelund, president of the European Chamber of Commerce in Beijing, highlights the deepening reliance on Chinese imports, especially components, as a pressing concern for the European economy.
The Financial Times recently reported that the European Union is contemplating a strategy requiring companies to source critical components from at least three suppliers to reduce dependency on China. This comes as the euro’s depreciation against the yuan and state subsidies in China make Chinese products more affordable, compelling European businesses to turn to Chinese suppliers. Oliver Richtberg of VDMA points out that the machinery industry in Europe is under significant pressure, with Germany losing around 22,000 jobs in this sector last year alone.
Data analyzed by Soapbox, a China trade monitoring website, reveals how this dependency is manifesting across various sectors. For instance, the EU imports a staggering 88% of its amino acids by volume from China, and 96% for polyhydric alcohols, essential for products like plastics and cosmetics. The growing trade imbalance has led to China becoming Germany’s top trading partner, with its trade surplus with Germany doubling between 2024 and 2025.
Amid these challenges, the EU is working on legislative measures, such as the Industrial Accelerator Act and an updated Cyber Security Act, to bolster its industrial capabilities. However, these won’t take effect until 2027, leaving the EU in urgent need of immediate solutions. Andrew Small, director of the Asia program at the European Council on Foreign Relations, emphasizes that current EU measures aren’t sufficient to address the import surge, and that deeper political commitment is necessary to restore trade balance.
The EU’s strategic decisions will be carefully weighed against potential reactions from China, which remains influential in this economic equation. As Beijing continues to navigate and potentially disrupt the EU’s countermeasures, the prospect of further economic reliance on Chinese imports looms large, with potential security implications for European nations like Germany.