China’s growing exports threaten European growth, and Goldman Sachs warns Germany, Italy, France, and Spain will feel the impact.
Beijing drives an export-led recovery, intensifying global trade competition and forcing European economies to absorb mounting pressure.
Goldman Sachs cut its growth forecasts for Europe in response to China’s renewed export push.
Economist Giovanni Pierdomenico said rising Chinese goods supplies widen Europe’s trade deficit and weaken its global competitiveness.
He predicts euro-area GDP could drop 0.5% by 2029 due to stronger Chinese export competition.
Germany faces the largest impact, with GDP projected 0.9% lower over four years, Italy 0.6%, and France and Spain 0.4%.
Goldman notes that substitution of Chinese goods for European products accelerates Europe’s loss of market share.
Over five years, eurozone exports lost up to four percentage points of market share to China.
Each additional dollar of Chinese exports reduces European exports by 20 to 30 cents, eroding competitiveness.
Europe Struggles to Respond Effectively
The EU launched initiatives like the Critical Raw Materials Act and the AI Continent Action Plan, yet Goldman remains skeptical.
Analyst Filippo Taddei said Europe’s response suffers because the region depends heavily on China for critical inputs.
Targeted actions against Chinese products may succeed, but broad restrictions could clash with Europe’s raw material reliance.
Analysts warn the EU still faces structural dependence on foreign suppliers despite its programmes.
Goldman Sachs highlights insufficient funding, raising doubts over Europe’s ability to restore export competitiveness.
Experts argue a timid response could accelerate the decline of Europe’s industrial base as Chinese firms expand globally.
Conversely, aggressive tariffs or import bans could disrupt critical supply chains on which Europe relies.
Europe’s Industrial Strategy Faces a Crucial Test
Goldman notes Europe only invests significant funds in defence through the Readiness 2030 programme and €150 billion loans under the Security Action for Europe scheme.
Even in defence, Europe remains dependent on Chinese rare earths for weapons, drones, sensors, and advanced electronics.
Analysts stress Europe risks losing ground in sectors it once dominated without a unified and assertive industrial strategy.
Goldman stops short of calling for protectionism but raises urgent questions for policymakers.
Europe must decide if it can achieve industrial sovereignty and how long fiscal and consumer resilience can shield it from global pressures.
