Cheap Chinese products flood European markets, become major technological rival: Report
New Delhi, June 6
Cheap Chinese products have flooded the European markets, becoming a major technological rival for Europeans, who underestimated its capacity for innovation, according to a new report.
The European Union (EU) is apparently trying to "build a strategy that protects its industrial base without triggering a full-scale trade dispute with Beijing", according to the report in Le Monde.
Beijing is now competing in innovation-driven and high-value-added production sectors, including artificial intelligence (AI) and energy.
China now accounts for around 30 per cent of global manufacturing output while representing only 13 per cent of global consumption.
Moreover, Chinese car exports to Europe rose 26 per cent between 2024 and 2025, to almost 1.2 million vehicles, despite tariffs introduced only a year earlier, according to another report in Atlantic Council.
Tariffs on Chinese electric vehicles were introduced in 2024, including 17 per cent on BYD, 18.8 per cent on Geely, and more than 35 per cent on SAIC.
However, tariffs failed to significantly slow Chinese market penetration. Brussels launched thirty-three trade investigations in 2024, and a similar number in 2025, many of them targeting China, said the report.
French President Emmanuel Macron recently warned that Europe could eventually be forced to "decouple" from China in strategic sectors if Beijing failed to address widening trade imbalances. Paris has also pushed to place currency distortions and global imbalances back onto the Group of Seven (G7) agenda.
According to the report, beginning in July this year, the EU will cut tariff-free steel quotas by 47 per cent, from roughly 33 million tonnes to 18.3 million, and will double out-of-quota duties from 25 percent to 50 percent through 2031.
The EU is also moving beyond traditional trade defence toward industrial policy, it added. The most consequential proposal now under discussion is the so-called "overcapacity instrument." The mechanism would effectively create the EU's version of Section 301 of the US Trade Act.
— IANS
Reader Comments
It's ironic that Europe is now facing the same challenge we've been dealing with. Chinese EVs at 35% tariff still selling well? That's a testament to their production efficiency. 🇮🇳 India needs to learn from this—we have the talent and market size to build our own tech ecosystem without relying on either side.
China's rise in AI and energy sectors is no accident—they've invested heavily in R&D while Europe got complacent. India should focus on niche areas where we can lead, like affordable solar tech or AI for agriculture. No point copying China's model of mass production.
The 'overcapacity instrument' sounds like the EU is finally getting serious. But tariffs alone won't fix the problem—Europe needs to incentivize local manufacturing and R&D. India can be a partner here, not just a market. We have a strong IT sector and skilled workforce that could complement European innovation.
As someone who works in trade, this report reflects a global shift. China isn't just a factory anymore—they're a tech powerhouse. But the EU's strategy of 33+ investigations a year seems excessive. India's approach of gradual liberalization with strategic tariffs might be a better model for balancing growth and protection.
I just hope Europe doesn't slap similar tariffs on Indian goods in retaliation. We've seen how knee-jerk protectionism can hurt developing economies. India should proactively engage with the EU to build fair trade agreements—focus on services where we excel, while working on manufacturing through PLI schemes.
We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.