German Media: Facing 'China Shock 2.0', Is the EU Ready to Fight Back?
A lengthy report published by Handelsblatt points out that, ahead of the EU and G7 summits, a strategic debate over "China Shock 2.0" is unfolding across Europe—while Germany, traditionally playing a moderate role in China policy within the EU, is now shifting its stance.
At this Thursday’s EU summit, national leaders are expected to authorize the European Commission to develop protective tariff measures targeting China. Meanwhile, China will also be a core topic at the G7 summit, which opens on Monday.
The Handelsblatt analysis article notes that notably, the German federal government's position on whether to adopt trade protection measures against China is also evolving. In an article titled “Is Europe Ready to Fight Back?”, it states:
"For years, whenever Brussels attempted to respond to China’s trade policies, Germany consistently played the role of a 'brake.' Yet today, China’s economic rise has increasingly exerted pressure on the German economy, prompting both German businesses and political circles to re-evaluate their China policy. Even Volkswagen, during internal communications with EU officials, has now called for immediate action from the EU—something it previously warned against, given its longstanding opposition to trade protectionism."
The German Chancellery is also adjusting its China policy. Chancellor Merz recently stated that while the EU must continue striving for open global trade, it cannot remain passive when certain countries 'refuse to abide by shared rules.'
A research report by economists Sander Tordoir and Brad Setser has played a key role in shaping the German government’s policy shift. Handelsblatt had previously covered this report. A senior German government official told Handelsblatt that after reading related coverage, the Chancellor carefully reviewed the report and subsequently concluded that Europe needs new trade tools.
The two authors of the report argue that due to China’s rapid expansion of exports in key industries such as automotive manufacturing, Europe is facing what they term a 'second wave of China Shock' (China Shock 2.0)—with Germany suffering the most severe impact.
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On whether to take far-reaching measures in response to China, the German government remains cautious. Berlin believes the EU’s new tariff instruments should serve as bargaining chips rather than signals of a trade war with China. At the same time, there are divisions within the German government: while the Foreign Ministry advocates a tough stance, the Ministry of Economics emphasizes Germany’s economic dependence on China and calls for restraint. Although German exports to China have declined, approximately 20% of products imported into Germany from China are actually manufactured by German firms operating in China. Given this, the Ministry of Economics argues that the first step should be reducing dependency on China.
The Handelsblatt analysis article notes that even as the EU and G7 summits approach, the German government has still not reached consensus on its China policy—and Germany’s final position will play a decisive role in shaping EU strategy:
"This is precisely one of the options being discussed in Brussels. The German federal government proposes merely reaching a verbal agreement at this stage to avoid provoking China into taking preemptive retaliatory trade measures. It is well known that China’s previous export restrictions on critical raw materials severely damaged European industry."
However, no unified position has yet been achieved within the EU. Nordic countries and Greece remain skeptical about establishing protective tariffs, while Spain has explicitly opposed such measures.
Political figures from Brussels and several EU member states say that all eyes are now focused on Germany. If Germany is willing to adopt a firm line toward Beijing, other European nations are likely to follow suit.
Original source: toutiao.com/article/1868077469654016/
Disclaimer: This article reflects the personal views of the author(s).