Since Donald Trump’s election victory last year, EU leaders have been toying with the idea of turning to China as an alternative to America. However, this is more an emotional reaction to the US President’s return than an idea rooted in clear strategy. European firms operating in China are now lowering their expectations of what Beijing can really offer.

A new survey by the European Union Chamber of Commerce in China reveals that 29% of European companies are pessimistic about their sector’s prospects in Beijing over the next two years, marking the highest level of negativity since 2011. With only 38% planning to expand their Chinese operations, and many shifting investments elsewhere in Southeast Asia or even back to Europe, the business reality contradicts the political narrative of deeper EU-China engagement.

The truth is that since the first Trump administration, whenever tensions have risen between Europe and America, continental leaders have called for a pivot towards China. But the numbers simply do not validate that approach. In fact, Europe’s deficit with China has done nothing but grow, rising from €164 billion in 2019 to €304.5 billion in 2024, representing an increase of 85.7% over just five years.

Brussels thinks that asking Beijing for fairer treatment of EU companies in China might rebalance the trade relationship between the two parties and compensate for any potential export losses to the US due to tariffs. But even if China were willing to radically restructure its economy, that wouldn’t be enough.

What makes an EU pivot to China unfeasible is, in fact, structural incompatibility, rather than something as circumstantial as Trump’s tariffs. While Brussels has a large trade surplus with America that mostly evens out when services are taken into account, its relationship with China involves direct competition in key European industries.

Developments in the electric vehicle sector provide some indication of the bleak future of overdependence on the Chinese market. German automakers have seen their market share in China drop from 24% in 2020 to just 15% in 2024. Meanwhile, Chinese EV manufacturers are making significant inroads in Europe. Just last month, BYD surpassed Tesla as the top EV seller in the EU market.

At the same time, European diplomatic overtures to China haven’t been especially successful. Leaders on the continent made the surprising move to invite Xi Jinping to Brussels for the EU-China summit marking the 50th anniversary of diplomatic ties between the trading bloc and Beijing, only for the Chinese leader to refuse. In response, EU officials moved the summit to Beijing, a choice which is difficult to read as anything other than desperate.

Xi has made clear that maintaining Chinese firms’ dominance in key manufacturing sectors is a matter of national interest. Excess industrial capacity to control global supply chains isn’t a mistake of economic policy, but instead a necessary part of China’s strategy. Brussels is severely mistaken to think that this focus is negotiable.

Another idea raised by EU leaders is that Chinese investments in the bloc could guarantee market access in exchange for technological transfer and European jobs. Beyond very specific projects, it’s dangerously misleading to suggest that Brussels could benefit from Chinese companies building or taking over factories in Europe in remotely the same way China did from European offshoring 30 years ago. Europe risks losing its domestic market to Chinese competitors, a problem that Beijing wasn’t facing when European brands were gaining access to its market in exchange for tech transfers.

While protectionism alone won’t save European industries, sacrificing domestic market dominance to Chinese companies, in the hope of a technology transfer which might make the continent more competitive, is delusional. For European countries to become more competitive, they will have to do it on their own.

European policymakers seem driven more by resentment towards Trump than by clear assessment of national interests. Even following its protectionist turn, America won’t match China’s manufacturing capabilities anytime soon, let alone without access to European supply chains. Despite their trade disagreements, the US and Europe complement one another far better than either side might like to admit.

---

Miquel Vila is a political consultant specialising in international affairs. He is also the executive director of the Catalonia Global Institute.

miquelvilam

---