The EU is its own worst enemy

The vote marked a sharp hardening of the EU’s China policy. Parliament supported military signalling around Taiwan, stronger criticism of Beijing’s relationship with Russia, and a tougher response to Chinese industrial competition. It also framed China’s economic policies as a direct threat to Europe’s future.

The most striking proposal was a continuous European naval presence and joint exercises in and around the Taiwan Strait. The report also demanded action against dumping and spying. Its lead author, Hilde Vautmans, said the vote should send a clear message of fair competition.

The article questions whether this approach will work. European warships are unlikely to make Beijing compromise on reunification, which the article describes as an issue on which China will never yield. The tougher stance also comes while Europe faces economic weakness and lacks traditional American backing.

The proposed instrument is a powerful trade defence mechanism. It would allow the EU to restrict market access when a third country creates severe economic distortions. France and Germany presented it as a way to respond faster and more forcefully to unfair competition.

In practice, the measure could function like a market-access kill switch. The European Commission would receive authority to decide how to respond and act swiftly, rather than relying only on slower, existing procedures. The proposal was set out in a joint paper and letter to Ursula von der Leyen.

Its political purpose was also important. Brussels wanted France, Germany and the wider union to show a united, hardline position before negotiations with Beijing. Yet the article says Europe was negotiating from profound weakness, because its economies were struggling and Washington had become hostile rather than supportive.

Europe faces a combined debt, growth and productivity crisis. France is under intense fiscal pressure, Germany is barely expanding, and the EU has fallen behind the United States in output per worker and technology companies. These weaknesses reduce Europe’s bargaining power abroad.

France’s debt rose to €3.6 trillion, equal to 119 per cent of GDP, during Emmanuel Macron’s presidency. Its borrowing costs reached a 24-year high. Germany’s growth stalled from 2020, with roughly 1 per cent projected for this year. Across the EU, labour productivity trails America’s by 20 per cent.

The technology gap is equally stark. Only two of the world’s 100 most valuable high-tech companies are based in the EU. Europe also missed the information-technology and artificial-intelligence revolutions. Unless reforms improve investment, innovation and productivity, Europe’s tougher external policies may rest on an increasingly fragile economic base.

The danger is a feedback loop. Governments with heavy debt pay more when interest rates rise. Those larger payments increase budget deficits, which can make investors demand still higher borrowing costs. Weak economic growth makes the debt burden harder to reduce.

France provides the clearest example. Its borrowing costs have reached their highest level in 24 years, while debt stands at €3.6 trillion, or 119 per cent of GDP. Analysts warn that rising debt-service costs could widen the deficit and raise borrowing costs again. A hung parliament makes fiscal consolidation harder.

The problem could spread beyond France. Markets may begin to doubt other heavily indebted euro-zone governments, creating contagion. The article says such a crisis could require intervention by the European Central Bank. Political uncertainty, including rising far-right support, would make coordinated action more difficult.

China occupies two roles in Europe’s economy. It is a powerful competitor in industries that once supported European prosperity, but it is also a major economic counterpart with which the EU still negotiates. That dual role makes simple confrontation or separation difficult.

The article says Chinese competition has undercut Germany’s traditional strengths in cars and high-end machinery. It also says China learned from the United States and became a close rival. At the same time, Brussels sought a united position before crucial negotiations with Beijing, showing that the relationship remains economically important.

The source does not describe China explicitly as a preferred trading partner. It presents a relationship defined by competition, negotiation and dependence. Europe therefore faces a difficult balance: defend its industries and respond to dumping or spying while preserving enough economic engagement to manage shared commercial interests.

The central alternative is economic de-risking rather than total decoupling. The EU could protect sensitive industries and respond to unfair subsidies or dumping while continuing ordinary trade. This matters because China is both a close rival and an important counterpart in negotiations.

In practice, Europe could combine targeted trade investigations, stronger investment screening and coordinated rules with continued engagement. It could negotiate limits on specific distortions instead of treating every Chinese product or investment as a security threat. Joint work could continue in areas where interests overlap, while strategic dependencies are reduced.

The article itself does not present this policy menu. It shows why a middle course may appeal: European economies are weak, Germany faces Chinese competition, and Europe lacks American backing. A blanket confrontation could raise costs further, while unrestricted dependence could leave European industries vulnerable. The choice requires sharper priorities and stronger domestic competitiveness.

Europe’s long-term problem is structural. Its single market remains fragmented, labour rules are rigid, and regulation can make experimentation expensive. Europe also lacks enough business leaders who mentor and invest in entrepreneurs. Together, these barriers weaken start-ups, productivity and the ability to scale new companies.

The article points to rules such as the General Data Protection Regulation and the AI Act, saying they have reduced venture-capital investment. Tesla and SpaceX are presented as examples of firms that flourished through venture capital, while Europe’s auto and space industries declined. Only two of the world’s 100 most valuable high-tech companies are EU-based.

Europe has also missed the information-technology and artificial-intelligence revolutions. Only about 30 per cent of reforms prompted by Mario Draghi’s 2024 competitiveness report have been implemented. The article argues that Brussels must simplify rules drastically and build a stronger start-up ecosystem before productivity and competitiveness can recover.