Europe could prosper as China’s trade ally rather than adversary
Europe missed its chance to make trade with China a win-win for both sides. It’s now opting for a trade war it’s unlikely to win altogether
Comparing current trade tensions between the European Union and China with the trade conflict between Europe and Japan in the 1970s and 1980s reveals striking similarities but also significant differences in terms of geopolitics, technology and state intervention. In both instances, European industry feared that imports from emerging Asian manufacturing hubs would undermine domestic production.
During the 1970s and 1980s, Europe faced fierce competition from Japanese exports. Companies from Japan captured market share through high-quality, efficient production and competitive pricing. European policymakers were concerned about the deindustrialisation of sectors such as automobiles, consumer electronics and machine tools.
Today, European manufacturers of EVs, batteries, solar panels, steel and other industrial products face intense competition from Chinese companies, which have become global leaders in strategic sectors. The loss of production capabilities and technological leadership is raising concern. Europe has responded with anti-dumping and protectionist measures.
The crucial difference lies in the fact that, while Japanese companies benefited from industrial policies and government support in the 1970s and 1980s, they were also political allies of the West. Japan enjoyed a favourable tariff policy in the US, for example. China, by contrast, is viewed as a “systemic rival”.