RaboResearch says Chinese competition is eroding Eurozone industrial surpluses in vehicles, chemicals and machinery, pushing Europe to recast the issue as one of industrial scale, investment and technological leadership rather than a simple bilateral deficit. Between 2016 and 2025, the EU’s trade balance with China worsened across core industries: surpluses in vehicles and chemicals shifted into deficits, while deficits in machinery and electronic equipment deepened. Chinese-made cars, solar panels, batteries and other net-zero products have been taking market share, sharpening economic-security concerns.
Mounting Industrial Pressures and Sectoral Risks
The report points to growing pressure across automotive, chemicals, machinery, clean tech, aerospace and biotech, with risks to skilled employment, supplier networks and R&D if Europe loses scale. It also frames high energy costs, heavy administrative and regulatory burdens, and weak investment as domestic drags, while dependence could rise even as Chinese clean-tech inputs lower near-term transition costs.
Policy Responses and the Path Forward
Europe is therefore moving towards selective de-risking, using trade-defence, diversification and “bucketing” to protect critical capabilities and manage rather than unwind integration, with conditional Chinese investment in strategic sectors and looser rules for non-strategic goods; recent Beijing understandings may smooth the shift, but a stable equilibrium is still distant.
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