China's Export Surge Puts Pressure on EU Manufacturers

China's industrial rise has led to a surge in exports, putting pressure on European manufacturers. The EU's trade deficit with China reached €1 billion per day, according to European Commission President Ursula von der Leyen. This imbalance is due to China's weaker domestic demand and its reduced dependence on European industrial imports.

The European Central Bank noted that China's export structure has become increasingly similar to those of European countries, particularly in machinery and transport equipment. Germany's manufacturing base is highly exposed to this competition, as its economy relies heavily on exports. Chinese firms are now competing directly with German companies in global markets.

China's export growth is driven by its industrial overcapacity and weaker domestic demand. The country's retail sales of consumer goods rose only 0.4 percent year on year in August 2026, making overseas markets more important for Chinese manufacturers. This has led to a growing trade imbalance between the EU and China.

The US-China tariff dispute has also contributed to China's shift towards European markets. The agreement to reduce tariffs on $30 billion of non-sensitive goods in each direction did not eliminate the underlying competitive pressure. China remains a major source of electric vehicles, solar equipment, and other manufactured products entering Europe.