In the article “Poorly designed industrial protection may do Europe more harm than good”, published on money.pl, Prof. Jan Hagemejer, President of CASE, analyses the increase in EU imports from China and discusses the risks associated with a broadly protectionist response.
He notes that the trade deficit with China is not necessarily a problem in itself. More important are the underlying factors behind its growth, including the redirection of Chinese exports following US tariff increases, excess production capacity and inventories in Chinese industry, possible currency manipulation, subsidies and dumping. At the same time, these factors should not automatically be interpreted as evidence of unfair competition. Specific products and sectors require case-by-case assessment.
The structure of imports from China is particularly relevant. More than 60 percent of EU imports from China consist of investment and intermediate goods: machinery, equipment, vehicles, materials and components used by European companies. As a result, broadly applied trade barriers could increase production costs within the EU and affect firms that rely on Chinese inputs in their supply chains.
Prof. Hagemejer argues that the EU should respond to unfair competition in a targeted and proportionate manner, primarily through efficient anti-dumping and anti-subsidy proceedings where such measures are justified. Industrial protection can be beneficial if it supports modernisation, innovation and the rebuilding of competitive advantages. It may be harmful, however, if it creates sheltered conditions that reduce pressure to improve productivity.
The article also addresses the role of EU standards. The Union can enforce health and safety requirements for imported goods and apply climate policy instruments such as CBAM. The use of labour standards and human rights criteria is more complex and should be based on transparent and non-discriminatory rules.
Prof. Hagemejer also points to the broader export context. Given weak demographic trends and slow economic growth in the EU, a significant increase in internal demand is unlikely. At the same time, developing economies are experiencing the growth of a middle class that may become an increasingly important source of demand for European goods. From this perspective, the EU should continue to expand its network of trade relations, including agreements with Mercosur, India and Indonesia, while managing relations with major developing economies, including China, with caution.
The article concludes that European industrial policy should address unfair competition without undermining the position of European firms. Protectionist measures should not cut companies off from essential inputs, increase production costs, weaken relations with future export markets or reduce incentives to innovate.
