European manufacturers could struggle to compete with rivals in China by the end of the decade, threatening jobs and industrial production across the continent, a senior European business leader has warned.
Jens Eskelund, president of the European Union Chamber of Commerce in China, said European companies may need to rethink their relationship with Chinese manufacturers. Rather than competing directly, some businesses are turning to Chinese supply chains to remain competitive in global markets.
China’s trade advantage puts pressure on Europe
Speaking to The Guardian during a visit to Brussels, Eskelund warned that Europe’s manufacturing sector faces growing pressure from Chinese exports. The warning follows a sharp rise in China’s global trade surplus, which surpassed $1 trillion in the first ten months of 2026.
The European Union’s trade deficit with China has reached a reported average of about 1 billion euros a day. Citing Goldman Sachs research, Eskelund said Chinese exports could leave EU economic output 0.5% lower by 2030, with Germany potentially facing a 0.9% reduction.
🔴 EU trade deficit with China hits €425 billion in 2025 amid industrial competition
EU trade deficit with China reached a record €425 billion in 2025, with €87 billion lost from European industry due to unfair competition. The deficit centers on advanced, security-relevant… pic.twitter.com/raRv2dTdrn
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Germany’s automotive industry is already facing difficulties. Carmakers are struggling with weaker demand in China while competing with Chinese manufacturers such as BYD, Geely and SAIC Motor. The pressure has also affected Volkswagen, which faces restructuring and potential job cuts amid competition from Chinese automakers.
BMW reported a 22% decline in Chinese sales during the first nine months of 2026. The company also lowered its profit outlook amid restructuring costs and challenging market conditions.
China’s industrial plans reshape global competition
Eskelund rejected the term “China shock 2.0,” arguing that Beijing has outlined its industrial ambitions for years. China’s latest five-year plan, covering 2026 to 2030, prioritizes artificial intelligence, robotics, quantum computing, biotechnology and advanced communications.
Government subsidies, tax incentives and coordinated industrial policies help Chinese companies expand production and compete internationally. The growing competition has already prompted trade disputes. The EU imposed additional tariffs on Chinese electric vehicles, leading China to challenge the measures at the World Trade Organization.
European companies explore Chinese partnerships
Despite these concerns, Eskelund said withdrawing from international trade would not solve Europe’s problems. Instead, European manufacturers are increasingly exploring partnerships with Chinese businesses to access established supply chains and reach international markets. The approach marks a shift from producing goods in China mainly for Chinese customers toward manufacturing in China for global markets.
The strategy also raises questions about Europe’s economic independence. Greece, for example, is pursuing domestic production of gallium to reduce Europe’s reliance on foreign suppliers, particularly for advanced technologies.
Eskelund said the new manufacturing approach has improved confidence among some European businesses operating in China. However, he warned that greater dependence on Chinese production could threaten jobs and weaken Europe’s economic independence. He urged European policymakers to seek trade arrangements that benefit both sides while protecting Europe’s long-term industrial interests.
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