The Five Europes Facing the Chinese Factory

The stability of industrial employment and output in Italy conceals the vulnerability of a dispersed manufacturing system built on supply chains, industrial districts, components, chemicals, machinery, metals and intermediate goods. Here, the risk is not to lose the top of the pyramid, as in Germany, but to see many of its middle tiers gradually eroded.

The United Kingdom may be outside the EU, but it is exposed to the same Chinese shock: employment has fallen by 40,000, while higher productivity has enabled the first modest rebound in output since 2021. Brexit changed the negotiating table and the rules, but it did not create productive capacity, and the surplus in services does not alter the structure of globalisation.

France is suffering less because its productive structure in strategic sectors — aerospace, defence, pharmaceuticals, luxury manufacturing and energy — enjoys greater protection from a state that acts as a stabiliser. A decline of just over 15,000 jobs has been accompanied by marginal growth in output.

Spain is the counterexample: its deficit with China is substantial, but it has not translated into industrial decline. Domestic demand, investment, more favourable energy conditions, European funds and high-value-added sectors have provided a cushion; the more limited overlap between Chinese imports and the job-intensive core of domestic industry has done the rest, producing more than 110,000 additional jobs and growth of over 1 per cent.

Relations with China are not simply a matter of tariffs. The issue is who produces, using what energy, within which supply chains, with which technologies and with what kind of state standing behind them. Trade defence does not create productive capacity and, without industrial policy, becomes a bulwark with no hinterland.

The point is to understand where China is a complementary supplier, where it is a direct competitor and where it has become an indispensable part of the infrastructure underpinning European production. Germany, Italy, the United Kingdom, France and Spain tell five versions of the same story: some risk the heart of manufacturing, others the depth of their supply chains; some compensate through services, others protect themselves through strategic sectors, while others withstand the pressure thanks to the domestic economic cycle.

London may remain outside the Union, but in its relations with the world’s major economic powers it continues to share the continent’s fate.

In relations with Beijing, the choice remains the same: to become an industrial system once again, supported by a common strategy and common debt, or to remain, as it is today, a wealthy market for other countries’ products.