Assessing the China shock for the euro-zone

The rise of China has brought both costs and benefits to the euro-zone over the past two decades, but policymakers are increasingly focusing on the costs. Indeed, euro-zone imports from China have risen by 30% since 2019, and euro-zone exports to China have fallen by the same amount. In response, the EU is likely to ramp up trade defence measures to protect specific industries, but we doubt that policymakers will go for across-the-board tariffs. So Europe will continue losing market share to China for the forseeable future.