Europe could prosper as China’s trade ally rather than adversary

The European Commission is signaling an imminent decision to counter what it terms the "China shock 2.0" – a surge of subsidized Chinese exports, notably in electric vehicles, solar panels, and batteries. This move suggests a potential trade war, drawing parallels with past trade disputes but highlighting key geopolitical distinctions.

Historically, Europe faced intense competition from Japanese manufacturers in the 1970s and 1980s. Japanese companies gained market share through high-quality, efficient production and competitive pricing, leading to concerns about deindustrialization in European sectors like automobiles and electronics. Europe responded with measures such as import quotas and anti-dumping investigations.

Today, European industries in strategic sectors like electric vehicles, batteries, and solar panels face similar intense competition from Chinese companies, which have become global leaders. This has raised concerns about Europe losing production capabilities and technological leadership. The EU's response has included anti-dumping duties, anti-subsidy investigations, and tariffs on electric vehicles.

A crucial difference between the current situation and the past with Japan is the geopolitical framing. While Japanese companies benefited from government support, they were also political allies of the West. China, in contrast, is explicitly labeled a "systemic rival" by the EU, making the trade relationship more complex and politically charged than the competition with Japan.