France and Germany move to tackle EU’s growing trade deficit with China
The issue was pushed back to the top of the agenda when Emmanuel Macron and Friedrich Merz agreed last week to draw up a "Franco-German roadmap" by September on how to respond to China's trade practices.
The push builds on a recent report, by France's High Commission for Planning, ominously called “The Chinese steamroller - quantifying the systemic threat to Europe's industrial base," which argues that Beijing's industrial rise now amounts to a "systemic shock" for Europe's manufacturing base.
The report says China's combination of scale, low production costs, heavy overcapacity and rapid technological upgrading is reshaping global manufacturing and eroding Europe's competitiveness.
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Almost a quarter of EU exports are exposed to serious Chinese competition, according to the report, while up to 55 percent of European manufacturing output -including cars, batteries, chemicals and machinery - could be "vulnerable in the medium term if current trends continue."
Already in 2019, a China-EU Strategic Outlook said that China had become the EU's “systemic rival” rather than a “partner” or a “competitor."
The world's workshop
Trade deficits with individual EU countries started to widen after China opened up its economy to the outside world in 1979, turning itself in the “world's workshop” with massive manufacturing in the coastal provinces, while inviting Western companies to outsource their own manufacturing to China. A woman works in a garment factory in Donghai county in east China's Jiangsu province, 27 October, 2020.
The gap widened exponentially after 2001, when China entered the World Trade Organistion. According to a report by the Council of Foreign Relations, China's exports increased five times since 2001, and China became the world's largest exporting country.
Meanwhile, Chinese imports from EU and other Western countries did not grow accordingly: currently the China - EU trade deficit stands at €360 billion a year in favour of China.
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Today, says the report of the French Commission for Planning, the gap in production costs between China and Europe is often "too wide to be closed quickly through innovation or productivity gains alone."
It also argues that existing EU trade-defence tools are too slow and too fragmented to cope with China's long-term industrial strategy. A worker inspects an electric car at a Zeekr factory in Meishan Island in Ningbo, in China's eastern Zhejiang Province on April 18, 2025.
But frictions remain: France has long argued for a tougher line on Beijing, while Germany has traditionally been more cautious because of its deeper commercial ties with China: Germany has always been Europe's largest trading partner with China.