Europe Faces a Second China Shock as Its Industrial Base Comes Under Pressure

Europe could face a new China shock in the industries that underpin its prosperity, Dutch economist Haroon Sheikh warned at the European Forum Alpbach. His concern was not simply stronger competition, but the permanent loss of industrial capacity. “If it disappears once, it will not come back,” Sheikh said.

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If it disappears once, it will not come back.

Sheikh argued that Europe needs to rethink how it manages openness. He called for more innovation and strategic industrial policy, along with tougher trade instruments if necessary. His message was that Europe should make greater use of the power it already possesses.

The conference also exposed disagreement over the event’s central question. Former NEOS leader Matthias Strolz said the Alpbach motto, “How Europe wins,” was wrongly framed because Europe should not define itself through winners and losers. He preferred asking how people can achieve “the good life in crazy times.”

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We need to have more confidence in the power we possess.

EU Migration Commissioner Magnus Brunner defended a harder European migration policy. He backed return centers outside the EU, new agreements with third countries and stronger protection of the bloc’s external borders. He said his goal was “to regain control.”

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We should not turn ourselves into winners and others into losers.

Brunner described the pressure on the Spanish enclave of Ceuta as a stress test that Europe had passed. At the same time, he said the episode showed where policy needed to improve, including external border protection, monitoring mobilization through social media and cooperation with countries such as Morocco. The discussion formed part of Die Presse’s podcast coverage of the Alpbach conference.

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We have passed this stress test.