EU faces 300,000 factory job cuts as China ‘colonises’ supply chains, industry warns

The European Union manufacturing sector faces a potential loss of 300,000 jobs by the end of 2026 due to China's growing dominance in supply chains, according to Eurometal, a leading industry trade body. The organization warns that Brussels must act against the "colonisation" of EU industries by Chinese component manufacturers. To highlight the issue, Eurometal plans to protest in Brussels with ten symbolic coffins, each representing specific concerns such as EU competitiveness, industrial jobs, and European factories.

Alexander Julius, president of Eurometal, believes that China's strategy is clear: to transition from raw material supplier to a finished product supplier, and control key product supply chains. This shift is evident in China's five-year plan, which aims to have a firm grip on critical product supply chains, including metals and chemicals used in 90% of manufacturing. Julius urges decision-makers in Brussels to understand the full impact of Chinese exports, particularly at the component level.

The EU has already taken steps to counter China's influence, imposing tariffs on Chinese electric vehicle imports in 2024 and raising tariffs on foreign steel imports in June. However, trade commissioner Maroš Šefčovič acknowledged that the EU's €360bn annual imbalance with China is "not sustainable." Despite these measures, the sector remains concerned about rising costs due to tariffs on steel imports, carbon emissions taxes for energy-intensive sectors, and the under-valued Chinese yuan.

These factors make it difficult for European manufacturers to compete with their Chinese counterparts.

Companies are often pressured to meet shareholder expectations and may continue sourcing from China despite political rhetoric from Brussels. Julius argues that job losses in European manufacturing, particularly in countries like Germany, are a direct result of this "colonisation" by Chinese manufacturers. The European Commission projected potential job losses of over 1 million in the sector by 2026 due to high energy costs and global competition, including over 100,000 job cuts at Volkswagen.

China has previously accused the EU of protectionism and threatened countermeasures if the EU targets Chinese companies or products further. However, the two sides have agreed to a three-month truce.