China’s rapid export expansion threatens Europe’s economy, and Goldman Sachs warns of GDP losses in Germany, Italy, France, and Spain as competition intensifies and EU responses lag.
European economies face growing pressure as Beijing renews an export-driven recovery push.
Goldman Sachs issues a stark alert through new reports and cuts its European growth outlook in reaction to China’s escalating export campaign.
Giovanni Pierdomenico states that rising Chinese goods supply undermines the euro area’s competitive position and deepens its trade deficit with China.
He expects stronger Chinese competition to reduce euro-area GDP by about 0.5% by late 2029.
The bank forecasts that Germany will take the hardest hit, with real GDP falling about 0.9% in four years. It predicts a 0.6% drop for Italy and about 0.4% for both France and Spain.
Goldman highlights the sharp substitution between Chinese and European goods across global markets.
It estimates that eurozone exporters have lost up to four percentage points of market share to Chinese rivals in five years.
For every dollar China adds in exports, Europe typically loses between twenty and thirty cents.
This shift steadily erodes Europe’s competitive strength.
Europe Struggles to Mount an Effective Response
The EU promotes several programmes to boost resilience, including the Critical Raw Materials Act and the AI Continent Action Plan, yet Goldman remains doubtful about their impact.
Filippo Taddei argues that Europe’s weaknesses limit its capacity to respond.
The bank stresses that Europe’s heavy reliance on Chinese inputs constrains its options.
Analysts caution that targeted action may work, but broader limits on Chinese supply must account for Europe’s dependence on China for key materials.
They emphasise that Europe still relies structurally on foreign suppliers despite these initiatives.
Goldman also warns that funding remains too small for Europe’s stated goals, raising doubts about its ability to regain export strength against China.
Experts argue that a weak response from Brussels could speed the decline of Europe’s industrial base as Chinese firms widen their global reach.
They add that an overly forceful reaction, such as sweeping tariffs, could backfire by disrupting supply chains vital to Europe.
Europe Confronts a Crucial Industrial Crossroads
Goldman notes that defence stands as the only major field where Europe has committed substantial resources.
It points to the Readiness 2030 programme, supported by €150 billion in Security Action for Europe loans, which contrasts sharply with underfunded or slow-moving initiatives elsewhere.
Yet Europe still depends on Chinese raw materials for defence, including rare earths essential for weapons, drones, sensors, and advanced electronics.
Goldman’s analysts deliver a clear message: Europe must adopt a more unified, assertive industrial strategy or risk losing ground in once-dominant sectors.
They avoid calling for outright protectionism but leave leaders with urgent questions about industrial sovereignty.
They ask whether Europe can achieve the strategic autonomy it seeks and how long it can rely on fiscal support and consumer strength to withstand mounting global pressures.
