French President Emmanuel Macron warned that Chinese exports are “literally killing a large part of the European industry,” admitting Europe was “slow to see that” as China’s trade surplus reached a record $1.2 trillion last year. This economic assault is now intensifying, with China redirecting its booming exports, including Electric Vehicles (EVs), batteries, and advanced machinery, towards Europe and other open markets, threatening to replicate the devastating "China Shock" that eliminated hundreds of thousands of factory jobs in the American heartland. Data released Tuesday by China’s National Bureau of Statistics revealed domestic consumer spending and investment slumped to levels unseen since the pandemic, with retail sales declining 0.6% last month and home prices falling at a quicker pace in May. This internal weakness drives Beijing's strategy of overproduction, flooding global markets with cheap goods at the expense of sovereign nations and their native working populations.
The Globalist Mechanism
The European Union, operating under World Trade Organization (WTO) rules, imposes relatively low tariffs on Chinese imports, a policy that has left European industries vulnerable. Exports from China to the 27-nation EU climbed 16.4% from January to May this year compared to a year earlier. For France, this meant its trade deficit with China, according to Beijing’s customs statistics, rose to $5.3 billion from $3.3 billion a year earlier. This systematic transfer of wealth and industrial capacity away from European nations is a direct consequence of globalist trade frameworks that prioritize open markets over national economic sovereignty and the livelihoods of citizens.
Economists David Autor of the Massachusetts Institute of Technology, David Dorn of the University of Zurich, and Gordon Hanson, now at Harvard, found that competition from China led to the loss of 2.4 million American jobs during the first China Shock, which began around the twenty-fifth year ago when China joined the WTO. This economic devastation contributed directly to the political upheaval that put Donald Trump in the White House twice, reflecting a popular rejection of policies that displace national workers. The current "China Shock 2.0" is characterized by China’s dominance in world trade and manufacturing, with its share of global goods exports rising from 4% in 2000 to 16% today, making Beijing’s trade policies far more consequential.
Cost to the People
Germany, a former industrial powerhouse, has been particularly hard hit. German companies, which once profited from exports to China, now struggle to compete with Chinese rivals in key sectors such as industrial machinery, construction equipment, cars, and chemicals. This competition has contributed to Germany’s economic stagnation, with its economy shrinking in 2023 and 2024 and growing only 0.2% last year. Chinese exports now compete with nearly 58% of the exports from the 21 European countries that share the euro currency, a significant increase from 46% in 2000. Eswar Prasad of Cornell University noted that the second China shock "is directly hitting advanced economies where it now hurts the most"—high-tech industries like EVs and high-end robotics that many countries "had been counting on for a manufacturing revival."
Maurice Obstfeld, senior fellow at the Peterson Institute for International Economics and former chief economist at the International Monetary Fund, stated that China’s export surge, "unless its leaders rein it in, will provoke a protectionist wave against Chinese imports worldwide." He explained that China’s policies, which include state-run banks paying low interest rates to savers while offering cheap loans to government-owned manufacturers, combined with a flimsy social safety net, pressure families to save rather than spend. This results in an "excess domestic supply of manufactured products, which must be exported abroad," flooding world markets and threatening to put European factories out of business. Beijing has also encouraged ruthless domestic competition among companies, leading Autor and Hanson to describe them as "apex predators" with whom "the rest of the world is ill prepared to compete."
Elite Indifference
Despite decades of urging from the United States and other countries for China to rein in overproduction and encourage consumer spending, the leadership has been "slow to act as if they mean it," according to Obstfeld. Wendy Cutler, former U.S. trade negotiator and now senior vice president at the Asia Society Policy Institute, observed that "Beijing has been relying on the rest of the world to address its overcapacity problem." This reliance highlights a systemic failure of global governance and elite institutions to protect national economies and the native working class from predatory trade practices. While leaders of the G7 rich democracies gather in Évian-les-Bains, France, to discuss tackling the "China threat," the ongoing economic devastation underscores the urgent need for sovereign nations to reclaim control over their trade policies, rather than relying on supranational bodies that have overseen the managed decline of Western industry.