Report warns China's economic weaknesses threaten Europe's industry

A recent analysis says China’s mounting economic vulnerabilities are creating fresh strategic and economic risks for Europe. Structural challenges such as an ageing population, a shrinking workforce, a prolonged property‑sector crisis, weak domestic consumption, high debt and slowing growth have forced Chinese households to save rather than spend and have pushed Chinese firms to expand aggressively abroad.

The report highlights that excess industrial capacity, backed by substantial state subsidies, enables Chinese companies to engage in aggressive pricing, undermining the competitiveness of European manufacturers. It also notes that China’s growing dominance in strategic industries deepens Europe’s dependence on Chinese technology and raises exposure to political and economic pressure.

To mitigate these risks, the European Union is advised to diversify supply chains, strengthen its technological leadership, and use market access, investment and cooperation as bargaining tools with Beijing. The analysis calls for stronger trade‑defence mechanisms, closer cooperation with partners in the Global South, and concrete concessions from China on export surges, shipments of dual‑use goods to Russia and stricter localisation requirements for Chinese investments in Europe. Failure to act could accelerate the erosion of Europe’s industrial base and weaken confidence in its democracies.