China’s export surge hits Europe’s economy and triggers warnings from Goldman Sachs, which predicts GDP losses in Germany, Italy, France, and Spain as competition intensifies and EU policies falter. Beijing renews its push for an export-driven recovery and places Europe in a difficult position. Goldman Sachs issues several reports that cut European growth projections in response to China’s aggressive export expansion. Giovanni Pierdomenico states that rising Chinese goods supplies threaten to widen the euro area’s trade deficit with China and weaken Europe’s already fragile global competitiveness. He expects stronger Chinese competition to reduce euro-area GDP by roughly 0.5% by late 2029. Goldman calculates that Germany absorbs the largest setback, with real GDP falling about 0.9% over four years. Italy experiences a 0.6% drop, while France and Spain each face declines of around 0.4%. These shifts unsettle Europe because Chinese goods continue to replace European products in global markets. Goldman estimates that eurozone exporters have lost up to four percentage points of market share to Chinese rivals over five years. For every extra dollar of Chinese exports, European exports usually fall by twenty to thirty cents. This ongoing substitution steadily undermines Europe’s competitive position.
Limited Tools and Growing Risks
Europe attempts to react through new programmes such as the Critical Raw Materials Act and the AI Continent Action Plan, yet Goldman Sachs doubts their impact. Filippo Taddei argues that Europe struggles to respond because it carries deep structural vulnerabilities. Analysts explain that Europe depends heavily on China for essential inputs, which restricts its ability to target Chinese products without harming its own industries. They warn that any broad restrictions on Chinese supply require careful consideration because Europe remains reliant on China for multiple crucial raw materials. Despite new initiatives, the EU still suffers from dependence on foreign suppliers. Goldman also warns that available funding falls short of Europe’s stated ambitions, which casts doubt on the bloc’s capacity to rebuild its export strength. Experts argue that a weak response from Brussels could speed up the erosion of Europe’s industrial foundation as Chinese companies expand their global reach. However, an overly forceful response, including sweeping tariffs or wide-ranging import limits, could disrupt supply chains that Europe still needs.
A Challenge to Europe’s Industrial Ambition
Goldman Sachs notes that defence stands as the only field where Europe commits significant funding. The bloc’s Readiness 2030 initiative, supported by €150 billion in loans through the Security Action for Europe scheme, contrasts sharply with other programmes that remain underfunded or slow to progress. Even so, Europe still relies on China for critical raw materials used in weapons, drones, sensors, and advanced electronics. The analysts deliver a clear message: Europe risks losing influence in key industries without a united and forceful industrial strategy. They avoid calling for protectionism, yet they press policymakers to confront urgent questions. Europe must decide whether it can secure real industrial sovereignty and determine how long it can depend on fiscal support and consumer strength as global pressures intensify.
