China’s export surge intensifies competition and threatens Europe’s economy, as Goldman Sachs warns of GDP losses in Germany, Italy, France, and Spain. Analysts highlight how expanding Chinese output challenges Europe because EU leaders deliver weak policy responses. Beijing drives an export-led recovery and pushes global rivals aside as it accelerates shipments into major markets. Goldman Sachs cuts European growth forecasts and links the downgrade directly to China’s renewed export push. Giovanni Pierdomenico states that rising Chinese goods supply exposes the euro area to mounting risks and widens its bilateral trade gap with China. He explains that this surge also undermines the bloc’s weakened global competitiveness. He expects stronger Chinese export competition to trim euro-area GDP by about 0.5% by late 2029.
Germany faces the heaviest burden, as projections show real GDP falling roughly 0.9% over four years. The bank expects Italy to take a 0.6% hit and anticipates drops of around 0.4% in France and Spain. Goldman Sachs stresses how deep substitution between Chinese and European products shapes this pressure. Its research shows eurozone exporters losing up to four percentage points of market share to Chinese firms across major global markets over five years. For every dollar China adds in exports, Europe usually loses between twenty and thirty cents. This pattern steadily erodes Europe’s competitive advantage.
Europe’s Limited Room to Maneuver
EU leaders attempt to counter these forces through programmes such as the Critical Raw Materials Act and the AI Continent Action Plan. Goldman Sachs doubts these initiatives will deliver meaningful protection, as Europe struggles with structural weaknesses. Filippo Taddei argues that Europe’s response remains constrained by its own vulnerabilities and its dependence on China for core inputs. Analysts acknowledge that targeted action against selected Chinese products remains possible, yet broader restrictions could collide with Europe’s reliance on Chinese raw materials. They warn that Europe continues to depend on foreign suppliers despite new programmes.
The bank also argues that Europe lacks adequate funding to meet its stated ambitions. Analysts question whether the EU can rebuild export strength without larger and more effective investment. Experts caution that a weak response could accelerate the erosion of Europe’s industrial base as Chinese firms expand their global reach. They also warn that aggressive tools such as sweeping tariffs or broad import limits could disrupt supply chains that Europe still needs.
Strategic Resolve Faces a Crucial Test
Goldman Sachs stresses that defence remains the only area where Europe commits substantial resources. The bloc’s Readiness 2030 programme, supported by €150 billion in loans through the Security Action for Europe scheme, contrasts sharply with other underfunded initiatives. Yet Europe still depends on China for key materials used in defence, including rare earth elements essential for weapons systems, drones, sensors, and advanced electronics.
Goldman’s analysts deliver a clear message: Europe must adopt a more unified and assertive industrial strategy or risk losing ground in sectors it once dominated. They avoid calling for outright protectionism, yet they pose urgent questions for policymakers. Can Europe build the industrial sovereignty it seeks? And how long can fiscal support and resilient consumers shield the bloc from intensifying global headwinds?
