Fears of new China shock as EU industry’s reliance on imports grows
Summary
Europe is becoming more dependent on imports of components from China, which is causing concern about local factories closing and job losses. European leaders are planning urgent talks to find ways to reduce this reliance and protect local industries.Key Facts
- Europe imports a large volume of industrial components from China, increasing dependence.
- This trend is compared to the “China shock” in the US 25 years ago, when China’s trade growth led to many local jobs being lost.
- The European Union is considering rules requiring companies to buy critical parts from at least three different suppliers.
- Chinese products benefit from government subsidies and a currency exchange rate that makes them cheaper.
- Europe lost 22,000 jobs in Germany’s machinery industry last year due to competition from Chinese imports.
- Some key ingredients and raw materials used in industries like pharmaceuticals and plastics mostly come from China.
- EU tariffs of up to 35% on Chinese electric vehicles have been offset by changes in currency exchange rates.
- European officials are meeting soon to discuss measures to address these trade and dependency issues.
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