Chinese Hyper-competitiveness: A Lasting Threat to European Industry
As the United States increases trade barriers, China continues to gain market share in nearly every sector, including the most innovative ones. A recent report from Rexecode, authored by Célia Colin, indicates that this trend is not cyclical; it is based on structural fundamentals—very low production costs, high productivity, massive state support, and accelerated automation—that suggest lasting, if not heightened, pressure on European industry. The Sino-European confrontation is only just beginning.
Price competitiveness shaking up all sectors, from toys to semiconductors
Since the end of the pandemic, China has established a remarkable lead in exports. By July 2025, its volume of exported goods had increased by 44% compared to 2019 levels, while the Eurozone was still showing a decline of 6%. This divergence highlights the strength of a productive apparatus that goes beyond traditional sectors: China now holds 41% of the global semiconductor market, 38% of drones, 22% of industrial robots, and 59% of toys and sporting goods. In other words, the advantage is no longer confined to low-end products; it now extends to advanced technologies.
The main explanation lies in costs. Since late 2019, producer prices have risen by only 2% in China, compared to +26% in the Eurozone. This significant gap allows Chinese manufacturers to offer products at prices that outcompete those in the European market. In the automotive sector, studies reported by Rexecode highlight a striking example: the labor cost for a BYD vehicle is 77% lower than that of an equivalent model produced in Germany. Manufacturing wages remain almost 70% lower than in Europe, and the growth of Chinese wages is slowing, even as productivity gains far exceed those of European companies.
This reality is not new, but it has been strengthened by China's macroeconomic strategy. For over twenty-five years, Beijing has prioritized supply and investment over consumption. The result is clear: between 2000 and 2010, GDP in volume grew by 10.6% annually, driven by record investments and an 18% annual increase in exports. Between 2024 and 2025, investment in equipment and machinery continued to grow at an average of 16.2%, enabling a remarkable leap in industrial automation.
China now has 470 robots for every 10,000 employees, placing it third worldwide, behind South Korea and Singapore, but already ahead of Germany and Japan. France, on the other hand, is stuck at 186. This robotic density increases the efficiency of Chinese production and partly offsets past wage increases.
Finally, the Chinese state plays a crucial role: subsidies are said to be three times higher than those in France, and four times higher than those in Germany or the United States. Additionally, there is the organization into industrial clusters, macro-industrial planning, and an estimated 51% undervaluation of the yuan compared to its purchasing power parity. All these elements create a systemic price advantage that Europe struggles to counter.
A strengthening momentum: why China won't slow down and why Europe must respond
The Rexecode study identifies eight factors that compose China's hyper-competitiveness. Five of these are expected to strengthen in the coming years: labor compensation, productivity, energy costs, logistics, and corporate profitability. The other three – subsidies, industrial policy, and currency undervaluation – show no signs of retreat. This combination poses a specific threat: Chinese competitiveness is not a cyclical phenomenon; it is structural.
Public support, already massive, could even intensify in strategic sectors: batteries, electric vehicles, semiconductors, AI, and industrial robotics. As trade tensions with the United States escalate, Beijing is redirecting some of its trade flows towards Europe, a vast market with less aggressive regulation. In many segments, China can absorb low margins to gain market share, whereas European companies must maintain their profitability.
That is why Rexecode presents a clear conclusion: China's hyper-competitiveness will not correct itself. It stems from a coherent, robust, and politically supported economic model. In other words, without a European industrial strategy, commercial protection mechanisms, or rebalancing measures, the exposed sectors – automotive, electronics, intermediate goods, machinery, robotics, photovoltaics – risk experiencing a lasting decline in production.
The stakes are high: this is no longer about sectoral competition, but a systemic differential that places the European Union before a strategic choice. The European industry must transform, protect itself, or adapt — it can no longer ignore the depth of China's transformation.
This content has been automatically translated using artificial intelligence. While we strive for accuracy, some nuances may differ from the original French version.
