China’s expanding exports threaten European economies, and Goldman Sachs warns Germany, Italy, France, and Spain will face GDP losses.
Beijing drives a renewed export-led recovery, intensifying competition for European firms.
Goldman Sachs cuts its European growth forecasts in response to the surge in Chinese goods.
Economist Giovanni Pierdomenico says rising Chinese supply weakens the euro area and widens its trade deficit.
He predicts the eurozone GDP will fall roughly 0.5% by 2029 due to Chinese competition.
Germany suffers the most, with real GDP projected 0.9% lower over four years.
Italy will lose 0.6%, and France and Spain about 0.4% each.
High substitution between Chinese and European goods in global markets magnifies Europe’s vulnerability.
Goldman Sachs reports eurozone exporters lost up to four percentage points of market share to Chinese rivals over five years.
For every $1 increase in Chinese exports, European exports typically decline 20–30 cents.
This dynamic steadily erodes Europe’s competitiveness.
Europe Struggles to Respond
The European Union introduced the Critical Raw Materials Act and the AI Continent Action Plan, but Goldman Sachs doubts their impact.
Analyst Filippo Taddei argues Europe cannot respond effectively because it remains vulnerable.
Europe relies on China for essential inputs, restricting its ability to block or limit Chinese goods.
Goldman warns that structural dependence on foreign suppliers persists despite EU initiatives.
The bank adds that funding falls short of the EU’s stated goals, undermining competitiveness restoration.
Experts caution that a weak Brussels response could erode Europe’s industrial base while Chinese firms expand globally.
However, overly aggressive measures, such as broad tariffs, risk disrupting supply chains Europe still depends on.
Defence Spending Highlights Uneven Industrial Strategy
Goldman Sachs notes Europe funds defence more aggressively than other sectors, with €150 billion allocated to the Readiness 2030 programme.
The Security Action for Europe scheme contrasts with underfunded or slow-moving initiatives in other industrial areas.
Even in defence, Europe depends on Chinese critical raw materials, including rare earths for weapons, drones, sensors, and electronics.
Goldman’s analysts warn that Europe risks losing ground in previously strong sectors without a unified, assertive industrial plan.
They do not call for protectionism but ask if Europe can achieve industrial sovereignty.
They question how long fiscal support and consumer resilience can shield the region from intensifying global competition.
