China’s export surge threatens Europe’s economy, with Goldman Sachs warning of GDP losses in Germany, Italy, France, and Spain.
Beijing’s renewed export drive intensifies global trade competition, putting European economies under pressure.
Goldman Sachs cuts European growth forecasts, citing rising Chinese exports and weak EU policy responses.
Economist Giovanni Pierdomenico says higher Chinese goods supply widens Europe’s trade deficit and undermines competitiveness.
He adds that stronger Chinese export pressure could reduce euro-area GDP by 0.5% by 2029.
Germany faces the largest drag, with GDP projected 0.9% lower over four years.
Italy may drop 0.6%, and France and Spain about 0.4% each.
Eurozone exports have lost up to four percentage points of market share to China in major global markets.
Every extra dollar of Chinese exports typically reduces European exports by 20 to 30 cents.
This substitution erodes Europe’s competitive advantage steadily.
Europe Struggles to Counter the Threat
The EU launched the Critical Raw Materials Act and AI Continent Action Plan to boost resilience, but Goldman Sachs doubts their impact.
Analyst Filippo Taddei notes Europe’s vulnerabilities limit its ability to respond.
Dependence on China for essential inputs restricts broader initiatives to curb Chinese goods in European markets.
Analysts warn that structural reliance on foreign suppliers persists despite EU programs.
Goldman Sachs highlights that available funding remains insufficient to restore Europe’s export competitiveness.
Experts caution that a timid EU response could accelerate industrial erosion as Chinese firms expand globally.
They also warn that aggressive measures, like sweeping tariffs or broad import limits, could disrupt critical supply chains.
Industrial Strategy Faces a Crucial Test
Goldman Sachs emphasizes that defence receives the only significant European funding, unlike other initiatives.
The Readiness 2030 programme allocates €150 billion through the Security Action for Europe scheme, contrasting with underfunded projects.
Europe still depends on Chinese raw materials, especially rare earths, for weapons, drones, sensors, and advanced electronics.
Analysts stress that without a unified industrial strategy, Europe risks losing leadership in key sectors.
They stop short of advocating protectionism but pose urgent questions for policymakers.
Europe must determine if it can achieve industrial sovereignty and how long fiscal support can shield it from global competition.
