Opinion: How Europe can rebalance the industrial policy match against China

Europe must fundamentally shift its approach to industrial policy and adopt a principle of 'deep strategic reciprocity' to effectively compete with China, according to a guest commentary by Veit V. Dengler and Tom Tugendhat.

The authors argue that China has not merely caught up but has leapfrogged Europe by leveraging cheap capital, building robust supply chains, securing critical raw materials, and benefiting from lower bureaucracy and structural energy cost advantages. This has propelled China to become the undisputed global leader in electric mobility and green future technologies.

Europe's traditional narrative of maintaining its competitive edge through open trade and stringent decarbonization goals has crumbled against this new reality. The commentary points to advanced, highly automated factories in China, such as those producing electric vehicles, which operate with remarkable efficiency and speed, producing vehicles at a significantly lower cost than comparable European models.

The piece criticizes Europe's regulatory framework and China's long-term, disciplined industrial strategy as key factors in the widening gap. It suggests that linking China's market access strictly to domestic value creation is essential for Europe to regain its footing in the global industrial landscape.