EU manufacturers could give up on competing with China by 2030, warns commerce chief

EU manufacturers could give up on competing with China by 2030, warns commerce chief Jens Eskelund says Europe may need to allow its companies to become part of Chinese firms’ supply chains

Europe’s manufacturers could give up on attempting to compete with their Chinese counterparts by the end of the decade if current trends continue amid fears over mass job losses, the head of the European Union Chamber of Commerce in China has warned.

In a case of “if you can’t beat them, join them”, Jens Eskelund said European companies operating in China were now thinking “Made in China for China” could be replaced by a philosophy of “Made in China for the world”.

Eskelund, who heads the influential Beijing-headquartered body, said European manufacturers could find themselves at an existential crossroads by the end of the decade, asking themselves: “What is the point of trading?”

As the EU gets tough with China with a deficit running at a record £1bn (€1.18bn) a day and an increasing mood for protectionism in Brussels, Berlin and Paris, he said European countries might need to shift their policies to allow domestic manufacturers to become part of Chinese firms’ supply chains, rather than treat them as competitors.

Eskelund, who is also a managing director of the shipping group Maersk’s Chinese operations, pointed to a report by Goldman Sachs that forecasted Chinese exports would lower the EU’s gross domestic product by 0.5% by the end of the decade while reducing Germany’s by up to 0.9%.

“It raises the question, if China’s trade delivers negative value, why trade?” the Danish businessman said.

“If you are suddenly in a situation where trade creates a lot of value for one party, but it destroys value for the other, countries will begin to ask themselves, why do we trade?” he said, pointing to a potential doomsday scenario in which manufacturing disappeared from European countries, causing mass job losses, collapse in the tax base and potential multigenerational unemployment and spiralling social benefits costs.

Speaking in Brussels, where he has been in back-to-back meetings with European Commission officials to give them feedback from Beijing, he said Europe is at an inflection point.

“If we create new dependencies, ultimately that might result in Europe losing its ability to determine its own future,” with mass job losses and fraying of communities, Eskelund added.