EU increasing trade sentiment shifts to China over USA

AI-generated image representing EU-China trade relations.

EU increasing trade sentiment shifts to China over USA

Sue Paige
Sue Paige
18 min read

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European trade sentiment has been gradually pivoting toward China, with economic ties deepening across the continent. From record trade volumes to infrastructure partnerships, the European Union’s engagement with China is expanding in ways that often outpace its transatlantic trade with the United States. This article examines why Europe increasingly favors China in trade, looking at EU-wide trends and specific industries – technology, automotive, and infrastructure – while contrasting China’s long-term economic strategy with recent U.S. protectionism. The analysis provides investors, policymakers, and general readers a clear view of the data and dynamics behind this shift.

EU-China Trade: Deepening Ties and Record Volumes

Europe’s trade with China has surged in recent years, underscoring China’s rising importance as a commercial partner. In 2020, China surpassed the U.S. as the EU’s largest single trading partner in goods – EU goods trade with China hit €586 billion, edging out the €555 billion with the U.S. (No, China is not the EU’s top trading partner – POLITICO). While the U.S. still leads when services are included, the goods trade milestone marked a historic shift. This momentum continued through the early 2020s. EU-China goods trade reached a record high of roughly €860 billion in 2022, before moderating to €739 billion in 2023 (EU trade relations with China). Even at the 2023 level (a 14% dip from the peak), China firmly remains Europe’s second-largest goods partner (and by far its top source of imports) (EU trade relations with China).

Such figures reflect deepening economic interdependence. China now accounts for about one-fifth of the EU’s total imports (A closer EU-Asia partnership for stronger and more resilient supply chains - CEIAS). In fact, China supplies over 50% of the EU’s imports in 11 out of 17 categories of critical goods, including key technology inputs like electronics, computers, and electric vehicle batteries (A closer EU-Asia partnership for stronger and more resilient supply chains - CEIAS). This has cemented China as an integral part of European supply chains. Europe’s export relationship with China has grown as well – China is the EU’s third-largest export market (EU trade relations with China) – but trade remains imbalanced, with Europe running a €292 billion trade deficit in 2023 (EU trade relations with China). Even so, European businesses and consumers have benefited from access to China’s vast manufacturing base and affordable products, fueling a pro-trade sentiment.

Belt and Road: China’s Investment and Long-Term Approach in Europe

A major factor drawing Europe closer to China is Beijing’s state-led investment strategy, epitomized by the Belt and Road Initiative (BRI). Through the BRI, launched in 2013, China has pursued long-term partnerships to build infrastructure and improve connectivity across Eurasia. Many European countries have signed onto BRI cooperation, attracted by the promise of new investment and trade links. Dozens of countries in Europe and Central Asia (including several EU members) have joined the BRI, seeking Chinese funding for projects like ports, railways, and highways (Countries in China’s Belt and Road Initiative: Who’s In And Who’s Out, Council on Foreign Relations) (Countries in China’s Belt and Road Initiative: Who’s In And Who’s Out, Council on Foreign Relations). Notably, Italy became the first G7 nation to sign a BRI memorandum in 2019, eyeing Chinese investment in its ports (although those projects stalled and Italy decided not to renew the deal by 2023) (Resilience at Core of China’s Geostrategic Approach to Europe, Internationale Politik Quarterly).

China’s state-led economic policies – marked by strategic planning and ample state financing – have made it an attractive partner for European infrastructure needs. Unlike purely commercial investors, Chinese state banks and enterprises are willing to fund large-scale projects with long payoff horizons. This patient, coordinated approach (guided by economic planning principles that prioritize long-term development) aligns well with Europe’s infrastructure ambitions. For example, the EU and China even established a “Connectivity Platform” in 2015 to coordinate BRI projects with European transport networks (Resilience at Core of China’s Geostrategic Approach to Europe, Internationale Politik Quarterly). Through such frameworks, China has systematically connected with Europe’s development plans, offering what many see as a win-win investment approach: Europe gets modernized facilities and China expands its trade routes.

Technology Integration: European Firms in Chinese Supply Chains

Technology trade and collaboration illustrate Europe’s growing integration with China’s economic ecosystem. European tech firms today are deeply embedded in Chinese supply chains – both as importers of components and as sellers into China’s market. China’s role as the “factory of the world” for electronics and advanced equipment means European industries rely on Chinese suppliers for countless inputs. As noted, China dominates EU imports of high-tech goods, providing critical items like semiconductors, telecom equipment, computers, and renewable energy components. In 2022 alone, the EU imported over $215 billion worth of key tech goods from China, far more than from any other country (A closer EU-Asia partnership for stronger and more resilient supply chains - CEIAS). This ranges from everyday electronics to sophisticated machinery.

Such integration goes both ways. Many European companies have also established a strong presence in China, tapping into its innovation and manufacturing capabilities. For instance, Europe’s industrial giants in sectors like automotive electronics and machinery co-develop products with Chinese partners or maintain R&D centers in China. The result is a tech ecosystem where European designs and Chinese manufacturing are closely intertwined. A German engineering firm might source circuit boards from Shenzhen, while a French tech startup might leverage Chinese assembly lines to scale up production. European telecom providers have in the past partnered with Chinese tech firms to roll out infrastructure (e.g. 5G equipment), and despite recent political hurdles, cooperation in areas like cloud services and AI research continues. All this means European tech executives often view China not just as a competitor, but as an indispensable collaborator and market.

At the policy level, Europe’s need for tech inputs has even tempered its stance on “decoupling” from China. EU officials openly acknowledge the difficulty of reducing reliance on Chinese tech supply chains, given that China supplies over 50% of certain high-tech imports to Europe (A closer EU-Asia partnership for stronger and more resilient supply chains - CEIAS). This reality fosters a sentiment that engaging with China – securing stable supply lines and joint tech standards – is more pragmatic than aligning with sweeping U.S. export bans or trade decoupling moves. In short, Europe’s digital and high-tech sectors have a strong incentive to maintain good trade relations with China.

Automotive: Chinese EVs Reshape Europe’s Car Market

Perhaps the most visible impact of China’s economic rise in Europe is in the automotive industry, especially with the electric vehicle (EV) boom. China has rapidly become an auto export powerhouse and is now the world’s largest automobile exporter – accounting for roughly 60% of global EV sales in 2023 (Sharing the Road). This has begun to transform Europe’s car market, as affordable, tech-laden Chinese EVs make inroads with consumers. European car buyers are seeing an influx of new options from China’s leading EV brands like BYD, NIO, Xpeng, MG (SAIC), and others. These vehicles often undercut European models on price while offering competitive quality and features. In fact, Chinese electric cars sell for about 20% less on average than comparable models from French, German, or Italian automakers (Sharing the Road), a compelling advantage for cost-conscious consumers and for accelerating EV adoption.

File:2024 BYD Tang GIMS 2024 1X7A2258.jpg - Wikimedia Commons)

Chinese automakers are entering Europe’s EV market in force. Pictured: A BYD Tang electric SUV on display at a European auto show. Chinese EVs like this offer high tech features at lower prices, contributing to their growing popularity in the EU.

The influence of Chinese players goes beyond just importing finished cars – it extends into joint ventures and partnerships that are reshaping Europe’s auto industry. European and Chinese companies are increasingly collaborating on EV technology, manufacturing, and supply chains:

  • Major Chinese battery producers have invested in Europe, building gigafactories that supply European car assembly lines. For example, China’s CATL (the world’s biggest EV battery maker) opened a €1.8 billion battery plant in Germany capable of 14 GWh, with plans to expand and a second 100 GWh plant underway in Hungary (Politics aside, China’s CATL ramps up cell production in Germany, Reuters). CATL’s European facilities will make it the largest battery manufacturer in Europe (Politics aside, China’s CATL ramps up cell production in Germany, Reuters), embedding Chinese technology into the heart of Europe’s EV supply chain and supporting carmakers’ electrification plans.
  • Chinese auto firms have acquired stakes in European brands or set up joint ventures. Geely (China) owns Sweden’s Volvo Cars and the British sports car marque Lotus, and has partnered with Mercedes-Benz to revive the Smart city-car brand as an EV – these collaborations blend European design with Chinese manufacturing. Another example is SAIC’s MG Motor, a formerly British brand now selling Chinese-made electric SUVs across Europe. Such joint ventures mean the line between a “European” and “Chinese” car is blurring, as development and production become shared.
  • Europe is also directly importing a wave of China-built EVs. From mass-market SUVs to luxury sedans, these imports have already captured a small but rapidly growing share of Europe’s auto sales (Chinese brands held about 2.5% of the EU market in 2023 and are projected to rise further). European auto executives have taken notice – some are even partnering with Chinese EV startups to access new software or battery tech.

While this Chinese incursion raises competitive concerns in Europe (EU regulators launched an inquiry into EV import subsidies, for instance), it undeniably expands consumer choice and accelerates the EV transition. European trade sentiment is influenced by this dynamic: trade with China is bringing tangible benefits (affordable EVs to meet climate goals), even as it challenges domestic producers. Policymakers thus face a balancing act, but many have opted for engagement over confrontation, knowing that outright protectionism (like high tariffs on Chinese EVs) could backfire on consumers and hinder green objectives (Sharing the Road).

Infrastructure Partnerships: Chinese Investment in European Ports, Rail, and Logistics

One of the clearest examples of Europe’s openness to Chinese economic partnership is in infrastructure. Over the past decade, Chinese state-backed companies have invested heavily in Europe’s ports, rail lines, and logistics hubs, often under the Belt and Road banner. These projects improve Europe’s connectivity and create jobs, which has made them attractive to local governments and business groups. Key industry-specific impacts include:

Port of Piraeus - Wikipedia

Chinese investment has revitalized European infrastructure. Above: A panoramic view of Greece’s Port of Piraeus, which, after a COSCO-led upgrade, now ranks among the Mediterranean’s busiest ports. Projects like this highlight the appeal of China’s Belt and Road investments in Europe.

It’s worth noting that these partnerships have not been without controversy in Europe. Concerns about strategic dependence or security have led the EU to increase screening of foreign investments and scrutinize some Chinese deals. For instance, debates arose over Chinese stakes in ports and the potential leverage it gives Beijing (Resilience at Core of China’s Geostrategic Approach to Europe, Internationale Politik Quarterly). Nonetheless, there has been no wholesale reversal of China’s infrastructure footprint in Europe. Even countries that grew cautious (like Greece or Portugal) continue to host and profit from Chinese-managed assets. European officials often acknowledge that if they push China away, much-needed capital for upgrading ports, rail, and energy infrastructure might be harder to find elsewhere. In sum, China’s long-term infrastructure approach – building enduring assets – resonates with Europe’s economic needs, reinforcing positive sentiment toward trade cooperation.

China’s Long Game vs. U.S. Fragmentation: European Perspectives

The shift in European trade sentiment is also driven by a contrast in how China and the United States engage economically. China’s approach has been long-term, strategic, and relatively consistent, whereas U.S. trade policy in recent years has been seen as fragmented or protectionist, often frustrating European leaders.

From Europe’s viewpoint, China offers a clear economic “grand strategy”: initiatives like BRI come with decades-long plans, financing, and follow-through. Chinese officials frame the relationship as a partnership for mutual development – for example, by promoting connectivity and industrial investment. This approach, influenced by China’s state-guided economic model, means Beijing can coordinate government ministries, state banks, and companies toward a unified goal (e.g. increasing trade with Europe) and stick to it beyond electoral cycles. European business leaders appreciate this predictability and commitment. A port operator in Greece or a railway CEO in Germany knows that a Chinese partner (often a state enterprise) will likely maintain support even amid global downturns, because the investment is part of a bigger national strategy. There is a sense that China plays the “long game” in trade, prioritizing stable market access and growth over short-term disputes.

In contrast, the United States’ recent trade posture has been marked by abrupt shifts and protectionist measures that have alarmed Europe. Under the Trump administration, the U.S. imposed tariffs on European steel and aluminum and threatened steep tariffs on European cars, straining the transatlantic alliance. European officials warned that an escalating trade war would only benefit China – as EU foreign policy chief Kaja Kallas put it, if the U.S. and EU start a trade war, “the one laughing on the side is China” (Transatlantic trade war would hurt both sides, European leaders warn, Reuters). The unpredictability of U.S. policy (“totally unpredictable,” one European diplomat said of dealing with Trump (Transatlantic trade war would hurt both sides, European leaders warn, Reuters)) made it difficult for European firms to rely on the American market or leadership. Even with a change in U.S. administration, some policies continue to rankle. In 2022, the Biden administration’s Inflation Reduction Act (IRA), which included heavy subsidies and “Buy American” requirements for EVs and green tech, sparked outrage in Europe. EU leaders publicly criticized the IRA for “unfairly tilting trade away from the EU” and threatening to **“wreck European industry” with its America-first subsidies (Europe accuses US of profiting from war – POLITICO). Such U.S. measures are viewed in Europe as protectionist and unilateral, undermining the spirit of partnership.

These tensions contrast with China’s engagement, which, at least in economic terms, is seen as more accommodating of European interests. Beijing has generally not pressured European countries to choose sides or imposed broad sanctions on EU industries. Instead, it has pursued trade deals (like the now-frozen EU–China Comprehensive Agreement on Investment negotiated in 2020) and kept rhetoric focused on “win-win” outcomes. European trade officials find this pragmatic – even if they have concerns about market access or reciprocity in China, they prefer negotiation to confrontation. By comparison, Washington’s confrontational stance (trade wars, extraterritorial sanctions, etc.) can come across as “with us or against us.” This has fed a narrative in European capitals that U.S. policy is driven by short-term domestic politics, whereas China offers a steadier hand in economic relations.

None of this means Europe is abandoning its U.S. ties – the transatlantic trade relationship is still the world’s largest, worth €1.6 trillion in 2023 including services (EU trade relations with United States). But Europe is increasingly asserting “strategic autonomy” in trade, seeking not to be wholly dependent on one partner. The attractiveness of China’s approach – large-scale investments, growing consumer markets, and a coordinated policy framework – provides a powerful counterweight. European leaders often stress that they want engagement with both East and West, yet the practical outcome is that China’s role in Europe’s economy keeps expanding, while U.S.-EU initiatives (like the scuttled TTIP free trade agreement or recent disputes over subsidies) have stalled or caused friction.

Conclusion: A Balanced but Clear Reorientation

In summary, Europe’s trade sentiment favoring China over the U.S. is the result of tangible economic trends and strategic considerations:

For European investors and policymakers, this shift does not imply an outright pivot away from the U.S., but rather a pragmatic broadening of alliances. Europe is leveraging its relationship with a rising China to advance its own economic agenda, whether that means securing supply chains, attracting investment, or selling into Asia’s growth markets. The tone remains balanced – EU officials describe China as simultaneously a partner, competitor, and rival – but the current trajectory shows a Europe more willing than ever to do business with Beijing. As long as China continues to offer stable investment and trade opportunities, and the U.S. pursues policies seen as exclusionary, the sentiment in Europe will likely keep favoring deeper economic ties with China.

In the evolving landscape of global trade, Europe’s challenge will be maintaining this balance: reaping the benefits of China’s partnerships and planned approach, while safeguarding its own interests and keeping other alliances strong. For now, “socialism with Chinese characteristics” – in the form of strategic economic planning and state-backed deals – is subtly influencing Europe’s trade playbook, nudging it eastward in search of growth and stability. The implications will shape European markets and geopolitics for years to come, as the EU navigates between two economic superpowers and steadily carves out its own path.

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