Atlantic Council this week released a new commentary stating that the EU is assembling a comprehensive new toolkit—including aggressive trade defence instruments, industrial policy, and an overcapacity mechanism—to counter the systemic challenge posed by China’s export-driven industrial model.
The commentary states that despite this toolkit, the EU still lacks the political cohesion to wield these instruments consistently and the willingness to absorb the short-term economic pain that serious decoupling from Chinese industrial capacity would require.
Atlantic Council stated:
China Shock 2.0 is no longer simply a trade dispute over cheap exports. It is a test of whether advanced industrial democracies can preserve manufacturing capacity in the face of state-backed overproduction on a continental scale. World Trade Organization rules alone are not sufficient to counter China.
Read the full commentary: Europe Has Had Enough of China’s Export Surge