Recurring allegations directed at China — spanning excess production capacity, state subsidies, and below-cost pricing — have tended to reappear during periods when manufacturing employment in Western economies has contracted. Recent narratives circulating across Europe point to underlying concerns about the weakening of the region's industrial and manufacturing base.
A number of analysts argue, by contrast, that China is not the root cause of the issue, and that the proposed solution risks intensifying the pressures already in motion. Xiao Lisheng, a researcher at the Chinese Academy of Social Sciences, observed that while trade imports generate welfare gains, those benefits tend to be spread thinly across consumers who rarely perceive them, whereas the costs borne by domestic industries facing foreign competition are concentrated and readily apparent — a dynamic that helps explain why such narratives resonate with audiences. The imbalance in how trade's costs and benefits are distributed helps explain why the "China Shock" concept continues to hold traction in public debate.
Questions about Europe's manufacturing competitiveness have prompted debate over whether domestic policy choices bear responsibility for the sector's declining position. Power costs across Europe remain notably higher than those faced by competing economies, posing a structural challenge to the long-term viability of energy-intensive industries such as steel manufacturing, chemicals, and aluminium production. Analysts have attributed this outcome, at least in part, to labour and regulatory frameworks prevalent across Europe.
The EU's own trade safeguards add a further layer of difficulty to that pressure. Proposed revisions to the European Commission's steel safeguard framework would reduce import quotas by approximately half and double tariffs on volumes exceeding those thresholds, a move intended to protect domestic steel producers that could also place pressure on downstream manufacturers reliant on imported steel. The European Automobile Manufacturers' Association projected that the steel safeguard measures could impose annual costs of between five billion and nine billion euros on downstream producers, drive certain steel prices up by as much as 30 percent, and place smaller companies under pressure from complex origin requirements.
The association's report described the measures as a setback for European industrial competitiveness, and noted that broadening those tariffs to cover imported downstream goods could deepen that impact further. A policy brief published by the National Taxpayers Union in August characterised this pattern as "cascading protection," whereby tariff increases on raw materials such as steel raise production costs for manufacturers — including appliance producers, shipbuilders, and welding firms — prompting calls from certain industry groups to extend trade barriers to finished goods rather than roll back the original levies.
The NTU noted that while such tariffs may shield domestic producers from foreign competition, they do not necessarily strengthen those firms in international markets — and in practice, they tend to raise costs for European consumers and downstream industries, potentially weakening the broader economic sectors the measures are intended to support. The European anti-dumping tariffs on Chinese solar panels introduced in 2013 provide a relevant historical reference point: installation costs rose, consumer uptake fell, and SolarWorld, the German manufacturer that had actively sought those trade protections, subsequently entered insolvency proceedings.
Some analysts argue that a comparable pattern may be unfolding in the steel sector, with China having absorbed a range of economic pressures — including energy cost volatility, supply-chain strain, and inflationary effects — that would otherwise have fallen on European industries. Those who favour deeper economic ties with China point to potential benefits including the revival of underused industrial capacity, local job creation, the role of Chinese-made components in keeping European manufacturers price-competitive, and the contribution of Chinese clean-energy infrastructure to lowering the overall cost of the global shift away from fossil fuels — a web of dependencies that, according to some analysts, has not yet been fully weighed by European policymakers.
Air conditioning units from Chinese manufacturers saw heightened demand across Europe during a recent heatwave, outpacing what local supply chains were able to provide. Chinese-made intermediate goods offer European producers an affordable supply of components, potentially freeing up capacity for broader industrial development. This manufacturing base also allows European plants to obtain raw materials and manage expenses when international supply networks face disruption.
A study by the European Central Bank found that industries facing rising Chinese import competition received a 0.6 percentage point lift in industrial output growth when their reliance on Chinese intermediate goods increased. Research published by the World Bank in 2025 documented comparable improvements in Ethiopia, where imports of Chinese intermediate goods contributed to higher output and expanded manufacturing jobs.
Battery-powered cars topped all other drivetrain categories in France for the first time during August, surpassing hybrid, petrol, and diesel alternatives. Chinese firms have established a notable presence throughout the French electric vehicle supply chain, according to available industry data. A number of battery producers from China run facilities in the northern French region known as "battery valley," while Renault's chief executive François Provost has noted that the automaker's collaboration with a Chinese battery supplier has contributed to the price competitiveness of its vehicles.
The dormant Ebro manufacturing plant in Spain was brought back into operation through a partnership with Chinese automaker Chery. The collaboration at the former Nissan facility in Barcelona's Zona Franca generated around 1,000 direct positions and more than 3,000 indirect roles, fulfilling targets set out under Spain's reindustrialisation agenda. Meng Yuhong, China's consul general in Barcelona, described the venture as having restored manufacturing activity while also demonstrating the scope for expanded industrial ties between the two countries.
The Rosslyn, South Africa facility operated by Chery maintained its full workforce of 692 people and is projected to underpin roughly 3,000 jobs across its supply chain, with Deputy President Paul Mashatile noting that this would bolster the nation's manufacturing base. BYD's facility in Bahia, Brazil, had around 5,500 people on its direct payroll as of July, with projections placing total employment — both direct and indirect — at 20,000 positions.
Separate from capital flows, Chinese renewable energy manufacturing networks have helped reduce the overall expense of transitioning to cleaner power worldwide. Electricity generated from wind and solar sources has become dramatically more affordable over the last ten years, with average prices dropping by over 60 percent and 80 percent respectively, a shift driven substantially by manufacturing output from China. According to IEA projections, electric vehicles worldwide were on track to offset around 1.7 million barrels of daily oil consumption by 2025, with approximately one million barrels of that reduction attributable to China.
Wang Yiwei, a Renmin University professor, argued that open trade and mutually beneficial collaboration represented the most cost-effective and enduring route forward, and one that would best serve Europe's long-term interests. Wang argued that an openness-and-cooperation approach in the automotive sector would allow Europe to access China's established electric vehicle supply chain to reduce battery and manufacturing costs, while Chinese firms could leverage Europe's regional production infrastructure, established market presence, and brand expertise to co-develop vehicles meeting European specifications.
According to Lewis Ndichu of the Africa Policy Institute, the broader worth of Chinese manufacturing investment extends beyond the capital deployed to encompass the lasting assets it leaves behind, including workforce skills, technological know-how, supplier networks, and productive infrastructure.
