Full Breakdown
EU Firms Concerned Over China's Economic Slowdown Amid Trade Tensions
9/30/2025, 9:18:16 PM
Economic Outlook for EU Companies in China
The European Union Chamber of Commerce in China has expressed significant concern regarding the impact of China's economic slowdown on EU businesses, stating that it poses a greater challenge than the ongoing trade war initiated by U.S. President Donald Trump. Adam Dunnett, Secretary General of the EU Chamber, indicated that the business outlook for EU companies in China has reached its lowest point since the early 2000s, primarily due to a "huge overcapacity" in manufactured goods and weak consumer demand. A recent survey revealed that 71% of EU businesses view the slowdown in China as their foremost challenge.
Despite efforts by Chinese President Xi Jinping to stimulate domestic consumption through monetary and fiscal measures, the anticipated growth rate for China is projected at only 4% for the year, falling short of Beijing's target of 5% and significantly below the historical average of 9% since the late 1970s. Dunnett noted that the once manageable regulatory hurdles for foreign firms have become increasingly burdensome in the current economic climate.
Trade War Complications
While the trade war has not been entirely sidelined, it continues to affect EU firms, particularly regarding access to rare earth elements, which are crucial for high-tech industries. China dominates the global market for these materials, controlling approximately 70% of mining and 90% of refining capacity. Following Trump's announcement of reciprocal tariffs, China imposed export restrictions that require foreign companies to obtain special licenses, a process that can be lengthy and complicated. Dunnett highlighted that many EU companies are facing production stoppages due to delays in obtaining these approvals.
The strained relations between the EU and China have been exacerbated by the latter's close ties with Russia and a record trade surplus of €850 billion in 2024. Ursula von der Leyen, President of the European Commission, has cited these export controls as a catalyst for the EU's efforts to "de-risk" its economic relationship with China. Dunnett emphasized that while the EU is under pressure from the U.S. regarding its dealings with China, "de-risking from China is not the same as de-prioritizing China."
Criticism of Current Policies
Critics argue that the growing tensions and unpredictability in the business environment are detrimental to EU firms. Dunnett pointed out that political disagreements can suddenly impact sectors that previously seemed insulated from such issues. The imposition of tariffs on Chinese electric vehicles by Brussels and China's retaliatory measures against EU agricultural exports illustrate the volatility of the current trade landscape.
Verbatim Quotes
- “The most important issue for our members is the Chinese economy itself,” — Adam Dunnett, Secretary General, EU Chamber of Commerce in China
- “You think you are safe in one sector, and suddenly, some kind of political disagreement arises that you think has nothing to do with you, and suddenly you are affected as a result.” — Adam Dunnett
Conclusion
The combination of China's economic slowdown and the complexities introduced by the trade war has created a challenging environment for EU firms operating in China. As both sides navigate these tensions, the future of their economic relationship remains uncertain, with significant implications for global trade dynamics.
