Inside Europe’s China dilemma: Trade war or economic opportunity?

European manufacturers are facing stronger competition from Chinese imports, while Chinese investment can provide Europe with jobs and technology. The debate over how to respond matters because leaders fear industrial decline and job losses could deepen political discontent and strengthen far-right parties.

Pascal Lamy warns that Europe’s trade deficit with China has reached €1 billion a day and says its rapid growth could create serious social and political problems. Germany is reported to be losing 10,000 to 15,000 manufacturing jobs each month, while France and Germany have proposed giving the European Commission power to restrict imports linked to severe market distortions. China’s growing role in advanced industries has intensified the dispute over whether trade protection or economic partnership is the better response.