(11 December 2025 – Europe) The European Union Chamber of Commerce (EUCC) reports that European enterprises are hastening moves to diversify away from Chinese supply chains as Beijing’s protectionist rhetoric and export controls exacerbate global trade uncertainty.
China’s wide ranging export controls on rare earths and critical materials have sent European businesses into crisis mode, with some corporates suffering production shortages and significant losses. As a result, more than 7 in 10 European firms in China have reviewed their supply chain strategies over the past two years. Of these, over 1 in 4 are onshoring further into China, while 1 in 10 are building alternative supply chains outside the country.
China’s trade surplus exceeded US$1 trillion for the first time in November as exports to Europe and Asia Pacific (APAC) accelerated as a result of US tariffs, contributing to diplomatic tensions over unsustainable trade imbalances. Chinese exports to the EU expanded 14.8 percent year-on-year while shipments to the United States declined 29 percent in November.
The International Monetary Fund (IMF) is urging China to speed structural reforms and shift toward consumption-led growth, warning that reliance on debt-fuelled investment and exports is increasingly untenable amid global trade tensions. The IMF raised its 2026 growth forecast to 4.5 percent but warned property-sector weakness, local government debt, and subdued domestic demand continue to challenge policymakers.
“Probably the biggest problem we’ve seen in the Chinese economy is that there have been 37 consecutive months of factory gate deflation. When we have this gap between deflation in China and inflation in Europe, that adds to the imbalance in currency” commented EUCC President, Jens Eskelund.