{"id":642639,"date":"2026-10-02T12:56:12","date_gmt":"2026-10-02T12:56:12","guid":{"rendered":"https:\/\/www.newsbeep.com\/ie\/642639\/"},"modified":"2026-10-02T12:56:12","modified_gmt":"2026-10-02T12:56:12","slug":"europes-china-shock-is-hollowing-out-industry-and-shifting-politics-to-the-right-the-irish-times","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ie\/642639\/","title":{"rendered":"Europe\u2019s China shock is hollowing out industry and shifting politics to the right \u2013 The Irish Times"},"content":{"rendered":"

An open Europe in an open, globalised world. For the last 30 years, that\u2019s how EU <\/a>apparatchiks saw the European project and the EU\u2019s place in the world. The Germans <\/a>had an expression for it, Wandel durch Handel, which translates as \u201cchange through trade\u201d.<\/p>\n

It was based on the belief that the more you enmeshed countries in trade, the more they would cohere to global liberal norms. Economic rationalism would suppress conflict.<\/p>\n

It was the real-world expression of Francis Fukuyama\u2019s End of History thesis: the belief that communism\u2019s failure in 1990 would lead every country down the path of liberal capitalism.<\/p>\n

This fantasy crashed in 2022 when Russia invaded Ukraine.<\/p>\n

Russia<\/a>, it was thought, would never have risked its lucrative trade with Europe by initiating a war and weaponising the most lucrative part of that trade: energy.<\/p>\n

But that\u2019s exactly what it did, making former German chancellor Angela Merkel\u2019s<\/a> appeasement of Moscow and all-in bet on Russian gas go down as one of the biggest strategic errors of modern times.<\/p>\n

[\u00a0Angela Merkel\u2019s legacy under scrutiny in a Germany gripped by distrust and a rising far-rightOpens in new window<\/a>\u00a0]<\/p>\n

But in reality the debunking of Europe\u2019s open borders fantasy came earlier and had a bigger gatecrasher than Russia.<\/p>\n

Beijing<\/a>\u2019s \u201cMade in China 2025\u201d plan, announced by Chinese premier Xi Jinping<\/a> in 2015, is perhaps the real starting point.<\/p>\n

The aim of the plan was to transform China from low-grade assembler of cheap goods into high-tech manufacturing hub.<\/p>\n

To climb the global industrial ladder, it leveraged massive state investment, integrated supply chains and its rare earth monopoly, to produce at scale and at low cost.<\/p>\n

[\u00a0Francis Fukuyama and the case for being \u2018usefully wrong\u2019Opens in new window<\/a>\u00a0]<\/p>\n

Many say this climb has been aided by unfair trade practices, including import controls, ownership limits and trade espionage. <\/p>\n

Regardless, the strategy has transformed China <\/a>from industrial giant into manufacturing superpower. It accounts for nearly two-thirds of global EV (electric vehicle) sales and makes more than 75 per cent of the world\u2019s lithium-ion batteries.<\/p>\n

European leaders are slowly waking up to the so-called \u201cChina shock 2.0\u2033, not because it is so apparent that China is the lead force in many sectors, including EVs, machinery, chemicals, pharma and software, but because Europe, rather than the US, is the principal victim of this colossal industrial pivot.<\/p>\n

As China searches for markets to absorb its excess exports, it has increasingly directed much of that manufacturing overcapacity at Europe, hollowing out the continent\u2019s industrial capacity.<\/p>\n

This process has been accelerated by Donald Trump\u2019s tariffs<\/a>, which have reduced the US\u2019s imports from China while accelerating Europe\u2019s.<\/p>\n

EU imports from China have spiked by 89 per cent since 2015 and the bloc\u2019s trade deficit with Beijing now exceeds \u20ac1 billion a day.<\/p>\n

Germany\u2019s car industry is at the coalface of this hollowing-out. The big three -Volkswagen, BMW and Mercedes-Benz \u2013 are facing job cuts and plant closures as their Chinese sales plummet and they lose market share to lower-priced Chinese EVs.<\/p>\n

Volkswagen plans to axe 100,000 jobs by 2030. And it\u2019s not just cars: batteries, commercial vehicles, solar panels, wind turbines, machine tools and software are all being produced cheaper in China.<\/p>\n

China\u2019s state-run aircraft manufacturer, Comac, has even begun to rival Boeing and Airbus.<\/p>\n

European leaders are pushing China to accept import quotas.<\/p>\n

[\u00a0EU urges UK to raise tariffs on Chinese cars to avoid \u2018made in Europe\u2019 barriersOpens in new window<\/a>\u00a0]<\/p>\n

In her state of the union address last month, European Commission president Ursula von der Leyen said Europe\u2019s \u201cunsustainable\u201d deficit with China had reached a tipping point and that \u200bthe bloc was suffering from deindustrialisation as a result.<\/p>\n

The original China shock took place in the US.<\/p>\n

The US is estimated to have lost five million manufacturing jobs in the 10-15 years after China joined the World Trade Organisation in 2001. A combination of cheap imports and US firms making strategic decisions to offshore production in search of cheaper labour gutted the country\u2019s manufacturing base.<\/p>\n

The decline was unprecedented in US economic history and created the so-called Rust Belt from the Midwest to the Great Lakes, an area that spans from western New York to Michigan and north Illinois, encompassing states such as West Virginia, Ohio and Indiana.<\/p>\n

It was once the backbone of US industry but is now synonymous with economic decline, population loss and urban decay.<\/p>\n

The so-called \u201cRust Belt revolt\u201d unified black and white working-class voters against Hillary Clinton and the Democratic Party. Trump and the politics currently playing out in Washington are largely a product of this backlash.<\/p>\n

Now it\u2019s Europe\u2019s turn.<\/p>\n

Germany\u2019s far-right Alternative for Germany (AfD) party has been the chief beneficiary of the country\u2019s manufacturing woes.<\/p>\n

Its recent political victory in the German state Saxony-Anhalt \u2013 a manufacturing hub for automotive parts and components \u2013 was a watershed moment as it placed a far-right party on the brink of power at a regional level for the first time since the fall of the Third Reich in 1945.<\/p>\n

[\u00a0West fears AI may kill us all but China and others see \u2018immense\u2019 opportunityOpens in new window<\/a>\u00a0]<\/p>\n

The AfD\u2019s anti-immigration, anti-woke, \u201cGermany for Germans\u201d message is almost an exact replica of Trump\u2019s Make America Great Again soundbite.<\/p>\n

Europe needs to rebalance \u2013 fast \u2013 if it is to avoid the same fate as the US.<\/p>\n","protected":false},"excerpt":{"rendered":"An open Europe in an open, globalised world. For the last 30 years, that\u2019s how EU apparatchiks saw…\n","protected":false},"author":2,"featured_media":642640,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[125,272889,12495,72,114,969,5148,292,61,60,3589,1628,115,1713,1963,12139],"class_list":["post-642639","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-airbus","tag-angela-merkel","tag-boeing","tag-business","tag-china","tag-donald-trump","tag-european-union","tag-germany","tag-ie","tag-ireland","tag-russia","tag-trade","tag-united-states","tag-ursula-von-der-leyen","tag-us-tariffs","tag-xi-jinping"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/642639","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=642639"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/642639\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/642640"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=642639"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=642639"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=642639"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}