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China's Dual Squeeze on European Industry Intensifies 99

Posted by msmash from the closer-look dept.
European manufacturers are facing a two-front assault from China that has German industry associations warning of deindustrialisation: on one side, artificially cheap Chinese goods are flooding into Europe, and on the other, Beijing has demonstrated its willingness to abruptly cut off access to critical inputs like rare earths and semiconductors.

The alarm intensified in October when China added five rare earths to its export-licensing regime and then banned exports of computer chips made by Nexperia, a Dutch-headquartered but Chinese-owned chipmaker that supplies numerous European carmakers, according to The Economist.

Several European firms warned of production stoppages, and some German companies put workers on leave without pay. Germany's trade deficit with China hit $76.52 billion last year and is expected to surge to around $100.87 billion this year, The Economist reported, driven by collapsing German exports and a rush of imports in categories like cars, chemicals, and machinery that were once German specialties. Chinese brands now account for 20% of Europe's hybrid market and 11% of electric vehicle sales. German cars command just 17% of the Chinese market, down from 27% in 2020.

The rare earth controls were suspended for a year after the US and China struck a trade deal on October 30th, but the EU found itself a bystander to negotiations that directly affected its economy. Writing in the Financial Times, Robin Harding argues that China's explicit goal of self-sufficiency leaves Europe with few options. "There is nothing that China wants to import, nothing it does not believe it can make better and cheaper," he wrote, concluding that large-scale protectionism may be unavoidable if Europe wants to retain any industry at all.
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China's Dual Squeeze on European Industry Intensifies More

China's Dual Squeeze on European Industry Intensifies

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  • Dual squeeze? (Score:1)

    by Anonymous Coward

    I thought this was gonna be a tale of two testicles.

    • Re: (Score:1)

      by znrt ( 2424692 )

      it is. european elites had already fucked up its industrial base in favor of rents and stocks a while ago, then definitely sentenced it to death with project ukraine and who should be to blame now? ofc china. it's testicles all the way.

      • How in favour of rents and stocks?

  • You can't rely on a huge and unreliable trade partner with interests that might not align with yours. That's the new reality, sadly. And the world will be poorer for the pigheaded (if not bloodthirsty) pursuit of power and influence on the part of the USA, China and Russia.

    • Re:Europe is discovering what Canada discovered (Score:5, Insightful)

      by caseih ( 160668 ) on Wednesday November 26, 2025 @02:47PM (#65819631)

      Except that in the case of Canada, there was a great deal of trade in both directions, in terms of commodities and also finished goods. It was a mutually beneficial trade arrangement too. It promoted the US' interests without ham-fisted authoritarian threats. This sort of trade made the US the powerhouse it was. In other words this was a sharp shift in US government attitude from one of friendship to one of an adversary (which is really how all relationships and business deals have ever been done in Trump's life). Sadly there's no going back. The damage is done and the US will never ever recover the good will and trade benefits it once had with its closest allies and trading partners, no matter what a future Democrat does to try to undo the damage, now that Trump's attitude has become the attitude of the GOP.

      With China, though, there was no abrupt shift. China's goals have always been clear. The only thing they want from the west in terms of trade is raw commodities and foreign currencies. Whereas the west demands cheap goods, full stop. So China's domination of European industry and economies has been ongoing for years, and it's benefited by European policy and attitudes. China is happy to build high quality items and sell them for a premium, but there's no very little demand from the west. If there was demand, we wouldn't have seen local manufacturing capability disappear in the first place. Tariffs are not going to change these fact.

      • Implemented properly, yes tariffs would. As they reduce domestic demand for foreign supply. The problem is when there is no domestic supply to supplant the foreign supply. Then the result is just a domestic increase in the cost of goods and services. (Which is exactly what happened with Trump and the US. FAFO.)

        I think we're finally coming around to the idea of "Globalization only works when everyone is well off." Which is a good thing. The US has been heading this way for years. Trump, as much as I loathe
    • Rare earths are not rare. However, processing rare earths are very polluting. By buying these materials from China, Europe doesn't need this polluting industry within it's borders. China can pollute itself for Europe's benefit.

      If Europe doesn't want to deal with China, then it either needs to find another source or start processing rare earths within it's own territory and deal with the pollution itself.

  • You can't cut off cheap Chinese goods (Score:3, Interesting)

    by rsilvergun ( 571051 ) on Wednesday November 26, 2025 @02:33PM (#65819617)
    Europe like America gives too much money to its 1%. The only way to maintain their economies is with cheap goods made by slave labor in China. That's the only way to offset increasingly large amounts of money being moved from the bottom to the top.

    If you want to fix that you have to cut off the flow of money to the top and we're not going to do that. There's a variety of terrible reasons why that is the case but it just is.

    I honestly do not know a solution to prevent human civilization from collapsing. I suspect that within 10 or 20 years we are going to hand nuclear launch codes over to religious lunatics and that's going to be gave over for humanity.

    I definitely do not know how we avoid regressing back into feudalism even if we don't destroy our species. People just like worshiping rulers and kings and the ones that don't don't have the tendencies towards violence that the ones that do have. If it's one thing Afghanistan taught us it's that a very small number of idiots willing to use terrible violence can install a very very small number of people as absolute rulers.

    We could counter this with education and critical thinking but even among people who should be well educated all I'm hearing is how we should all go into the trades and be plumbers or whatever. Anti-intellectualism and a hatred and disdain for experts dominates discourse now. That overpowering 12-year-old urge to not be told what to do has completely overwhelmed society and I do not know how you push back against that.

    Basically don't tell me what to do.

    • Re: (Score:2)

      by haruchai ( 17472 )

      "Anti-intellectualism and a hatred and disdain for experts dominates discourse now"
      If by "now" you mean since the Reagan years...

    • That overpowering 12-year-old urge to not be told what to do has completely overwhelmed society and I do not know how you push back against that.

      Not everyone needs another mom.

    • Don't mistake intelligence or education for wisdom. Certainly, don't mistake the pretense of intellect for wisdom. We have had too many "smartest people in the room" presenting complex technocratic solutions that are ultimately just houses of cards. The fruits born by technocrats are rotten. Latin America is awash in examples of it, as are we. The ACA is a prime example of a technocratic solution that was entirely unwise despite having been created by experts from MIT and Harvard. Extraordinarily comp

    • "increasingly large amounts of money being moved from the bottom to the top."

      Do the poor even have the $trillions that the rich want, or does it come from financial markets?

      Why not deregulate financial markets and make taxes voluntary so you don't trigger adolescent rebellion in the rich, while printing and indexing a basic income so the poor have enough to live on and pursue their happiness?

      • Because that will not pacify the poor. Printing money constantly will cause monetary inflation, so only the rich will be able to buy anything of significant value like homes. You'd have to also give away housing. It makes much more sense just to take the money from the rich and give it to the poor, the rich will end up with it again anyway.

        • Comment removed based on user account deletion

          • Re: (Score:2)

            by cusco ( 717999 )

            You've never lived with hyperinflation. Know how I can tell? The thought of printing unlimited money based on nothing doesn't send chills down your spine.

            The experiment has been done many times, it always ends in failure. Always, and without exception.

            • Comment removed based on user account deletion

              • Re: (Score:2)

                by cusco ( 717999 )

                Deflation is not automatically bad, China is seeing deflation now, and that's actually the plan. To do it though you need competent leadership, which we in the west are sadly lacking.

                https://kdwalmsley.substack.co... [substack.com]

                Chinese deflation is a result of powerful supply-side forces that have the opposite effect: China’s economy continues to grow at solid rates, while rent-seeking profits are extinguished at the company level by high competition.

    • Europe like America gives too much money to its 1%. The only way to maintain their economies is with cheap goods made by slave labor in China. That's the only way to offset increasingly large amounts of money being moved from the bottom to the top.

      If you want to fix that you have to cut off the flow of money to the top and we're not going to do that. There's a variety of terrible reasons why that is the case but it just is.

      An alternative view is that China's cheap imports benefit mainly the American masses. The 1% can afford to pay extra to buy from anywhere, but the bottom 80% cannot. However, since the US economy is largely consumer driven, the bottom 80% must be kept alive and buying in order to support the economy (particularly the stock market) for the 1% to maintain and grow their assets.

  • European manufacturers are facing a two-front assault from China that has German industry associations warning of deindustrialisation: on one side, artificially cheap Chinese goods are flooding into Europe, and on the other, Beijing has demonstrated its willingness to abruptly cut off access to critical inputs like rare earths and semiconductors.

    Germany's trade deficit with China hit $76.52 billion last year and is expected to surge to around $100.87 billion this year, The Economist reported, driven by coll

    • Re:Artificially cheap? (Score:5, Insightful)

      by drhamad ( 868567 ) on Wednesday November 26, 2025 @03:09PM (#65819671)
      Well for one, China is willing to directly subsidize industries. But even forgetting that, when you aren't meeting the end countries laws re: human rights, safety, production methods, etc, yes, it's artificially cheap as it applies to domestic manufacturers. So if your answer for "Germany needs to adapt" is to adapt China-style laws, then I guess you're right. But that's probably not what we really want here.

  • Almost as if world trades were humming along just fine and someone decided to take a giant shit in the swimming pool. Now China has this rare earths license nonsense as a direct result of the USA.

    • World trade was headed to destruction. Now it's just heading there a bit quicker.

    • China was working on that for years. If for nothing but it's own interests. The US would have eventually cut China off even without Trump. The US would have to due to their ever increasing debt, unwillingness to make their 1% pay their fair share, and China's increasing middle class expectations. See also why China is busy spending time and effort to prevent their own experts from training foreign workers in cheaper neighboring countries. China has seen what happened to the US economy as a result of offshor

  • Europe will be ok.

    It just needs to regulate some more, ban some more business practices, and keep telling everyone else about how awesome it is.

    It will be just FINE!!!!

    Now get out there and pass out some more fines!

    • Re: (Score:2)

      by caseih ( 160668 )

      The Trump administration seems to think so. Increased government regulation through tariffs will fix it, along with bigger government. Ironic how the GOP has done a complete 180 over the years isn't it.

  • Comment removed (Score:3)

    by account_deleted ( 4530225 ) on Wednesday November 26, 2025 @03:13PM (#65819679)
    Comment removed based on user account deletion

    • Re:Competition (Score:5, Interesting)

      by caseih ( 160668 ) on Wednesday November 26, 2025 @03:23PM (#65819689)

      Well it's a problem or the US too. The last bastion of American industry is heavy equipment including construction and agricultural machines. Interestingly this is also a prime industry for Europe too. A lot of stuff is still made locally. But China is now making their own versions and just beginning to exporting them. And it's a double whammy. They can make them cheaper, but choose to just barely undercut western equivalent products (say by 20%), making a huge profit.

      • Comment removed based on user account deletion

        • The problem for Europe is not "China", its that they don't produce anything all that special. When people talk about Europe, they aren't usually talking about places like Norway that export oil. Europe has been living off fading empires. China is eating their lunch by providing those former colonies with better and cheaper products and investment to support producing products locally.

          The immediate counter example that springs to mind is chip-making equipment that the rest of the world's tech relies on (ASML).

          • Comment removed based on user account deletion

          • Re: (Score:2)

            by cusco ( 717999 )

            So what did the US do? Cut off China's access to advanced lithography equipment, prompting China to create its own litho industry. While they're not yet to the level of cutting edge chips from TSMC the new Huawai phones boast chips with their own design as good as the ones in iToys of just a few years ago.

      • Re: (Score:2)

        by AmiMoJo ( 196126 )

        I saw a YouTube video from a guy who bought a mini excavator from AliExpress: https://www.youtube.com/watch?... [youtube.com]

        It's surprisingly good. Japanese Kubota engine, everything else looks decent quality, especially considering the incredibly low price. I've seen similar videos from other people who bought heavy machinery like farm equipment and lathes.

        On the one hand it's a shame that our domestic manufacturing is finding it hard to compete. On the other, they aren't doing themselves any favours with things like D

    • Then the yuan would rise ...

      There is one thing they want to buy, Euro assets ... something which they can only do because the EU allows it.

    • Re: (Score:2)

      by Xarius ( 691264 )

      Does it need to be very competitive in the world market? As long as it's providing for and protecting its citizens, what's the point?

    • Re: (Score:2)

      by AmiMoJo ( 196126 )

      Take Germany luxury/performance cars, for example. The Chinese ones are every bit as luxury and well made, and often exceed them for performance. On top of that, the German manufacturers can't resist screwing their customers with bullshit like subscriptions for heated seats and no owner access to the engine bay.

  • holy propaganda Batman! (Score:3)

    by oumuamua ( 6173784 ) on Wednesday November 26, 2025 @04:35PM (#65819927)
    Summary fails to mention:
    Rare earth metals restricted in reaction to: US tariffs and chip restrictions.
    Nexperia chips freeze in reaction to: Dutch nationalization of Nexperia headquarters.
    German deindustrialization also heavily influenced by vastly higher energy costs since 2022.

  • Here what I expect (Score:4, Insightful)

    by Dr. Spork ( 142693 ) on Wednesday November 26, 2025 @04:41PM (#65819945)
    Right now, we're noticing that Chinese companies are offering us exploitative deals, and we don't like it, and think that tariffs will fix it. But with tariffs in place, we will find that now it's American companies that are offering us the exploitative deals, but they can charge more now, because they're insulated from outside competition. What I'm saying is that intranational capitalism is just as sleazy and brutal as international capitalism - only less efficient, because it's less competitive.

  • Germany gave it all up (Score:5, Insightful)

    by HnT ( 306652 ) on Thursday November 27, 2025 @04:16AM (#65820823)

    Germany gave it all up, hand over fist. Everything that was not stolen thru industry espionage, they gave up in state-controlled factories all the way to the entire R&D process - and for everything else, Chinese brands can just buy from the same suppliers that German brands have squeezed dry over the years. Plus Germany sold off KuKa for factory automation, too. China got it all, on a silver platter, without limits or caution. You could not have boosted China more forward if you planned and tried.

    This is a massive state-level case of consequences for their own actions, and especially with the German car industry, this is not affecting some innocent little angles. German car industry managers are the picturebook definition of hubris and arrogance and massive paychecks and bonuses despite rampant fraud, recalls, revenues dropping off a cliff and arrogantly laughing about the much more modern competition.

    If you want to see some proof for all that, look no further than the smoldering crater left by VWG forsaken cariad.

    The truly unsettling truth is, Germany does not have much else left in terms of big industry pillars. Automotive is gone, this will crush Steel who are already getting squeezed due to the lack of cheap Russian gas, and Chemistry is in shambles as well. Germany slept on every single technological paradigm shift since the 90s, no internet or general tech or microchip or AI industry, at all.

    And if you want to count on the stereotypical German hard work and business ingenuity, I can tell you this spirit and culture is long gone.

    Deeply crippling bureaucracy and hiding behind way, WAY overly protective regulations plus unbelievable wealth inequality and surprising high corruption, are all the true face of Germany today.
    And I have not even touched on all the other factors working against Germany like failed demographics, failed immigration&integration, broken infrastructure (trains and autobahn) and a general sense of despair and being overly satiated, mixed with an entirely unjustified sense of moral high horse and arrogance. Plus destructive political turmoil and rising extremism on both political sides. And a failed pension system where the young are bled dry so the old keep electing the same politicians who created this whole disaster.

    I would not hold my breath hoping that Germany can dig out of this hole any time soon.

    They have a deeply humbling time and a metaphorical very rough winter ahead of them.

    • The truly unsettling truth is, Germany does not have much else left in terms of big industry pillars.

      The entirety of Western Civilization is in the same basket... and it is getting hotter than it should. I wonder what that could mean?

      (going to hell in a handbasket is the imagery I was invoking here)

  • That's EU's own fault for not standing up against the US for blocking european companies from doing business with China and increasing tariffs themselves. Most restrictions China puts on are due to restrictions they gotten put on them. When we accept the US from blocking companies like ASML selling their machines to China, we cripple our own economy, we should not stand for that, especially since most parts of the machine aren't even US designed.

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