Europe Losing Ground to China

European leaders used a major industry summit to spotlight China as a central strategic challenge for the European Union, with French President Emmanuel Macron and German Chancellor Friedrich Merz warning that Europe risks falling behind unless it rapidly reduces dependencies, accelerates reforms, and strengthens its industrial base.

Macron: China Dependency Is a Strategic Vulnerability

Speaking at the European Industry Summit in Belgium, Macron said Europe must pursue balanced and mutually beneficial trade partnerships, but stressed that trade policy must now serve as a strategic instrument to reduce reliance on China, particularly in critical raw materials and strategic inputs.

Despite dozens of trade and mineral agreements, Macron warned that Europe remains “dangerously exposed,” calling for a shift from paper agreements to concrete projects. He outlined plans to expand extraction, processing, refining, recycling, and traceability, alongside the creation of European strategic stockpiles for critical materials—many of which are dominated by Chinese supply chains.

Macron said China’s state-driven investment model, combined with rising US tariffs and the permanent loss of cheap Russian energy since 2022, marks a structural turning point rather than a temporary shock. “China can no longer be seen as the main export market,” he said, arguing that Europe must become an independent economic power rather than a passive regulator.

Energy, Regulation, and Competition with China

Macron warned that high energy prices and carbon costs are accelerating deindustrialization, not decarbonization, putting Europe at a disadvantage against China’s lower-cost, state-supported industry. He called for a genuine European energy union, massive grid investment, long-term contracts, and an integrated market that treats nuclear and renewable energy equally.

He criticized Europe’s regulatory burden, saying excessive rules weaken domestic firms while competitors in China face fewer constraints. Macron also pointed to China’s heavy state subsidies, arguing that Europe must stop financing non-European solutions and invest instead in its own technological champions if it wants to compete.

Merz: China’s Speed Exposes Europe’s Weakness

German Chancellor Friedrich Merz reinforced Macron’s message by contrasting Europe’s slow growth with China’s rapid expansion. Over the past two decades, Merz noted, China has grown at roughly 8 percent annually, while the EU has averaged just 1% a gap he said Europe must urgently close.

Merz highlighted China’s ability to build massive solar farms within months, compared with EU projects that can take years just to secure permits. He proposed automatic approval for projects not processed within weeks or months, calling for sweeping deregulation across all sectors and a “regulatory clean slate” to restore competitiveness.

While rejecting protectionism, Merz warned that Europe cannot pursue climate goals at the expense of industry and jobs, stressing that prolonged stagnation would permanently weaken the EU’s ability to compete with China’s fast-moving industrial system.

A Shared Warning, Different Emphases

Although Merz cautioned against protectionism and Macron called for European preference and protection, both leaders agreed that China’s scale, speed, and state-backed investment represent a defining challenge for Europe’s future.

At the center of their message was urgency. Europe, they argued, must move faster, simplify rules, invest jointly—potentially through common debt—and act decisively if it wants to remain economically sovereign in a world increasingly shaped by China’s industrial power.