EU trade policy faces scrutiny as China's competitive edge deepens two decades after WTO entry

German economists warn that Europe's current tariff framework is ill-equipped to handle Beijing's state-backed industrial dominance, a challenge that will test the EU's resolve ahead of the next round of U.S.-China trade negotiations.

By Handelsavisen Newsroom · Automated 2026-06-19 04:53 UTC · 1 min read

Two decades after China joined the World Trade Organization, the European Union is facing a profound structural challenge as Beijing's state-backed industrial model continues to outpace Western competitors.

German economists are urging Brussels to fundamentally rethink its tariff and trade policies, arguing that the current framework is insufficient to counter the scale of China's manufacturing dominance.

The call for a harder line comes from Bert Rürup, chief economist at Handelsblatt, and Michael Hüther, director of the Cologne-based Institute of the German Economy (IW).

In a recent analysis, the pair argued that China's competitive advantage is no longer just a product of technological catch-up, but a result of sustained state support and overcapacity that distorts global markets.

They contend that the EU's reliance on traditional free-trade mechanisms has left it exposed to what they term a "China Shock 2.0."

This strategic reassessment arrives at a critical juncture for global trade.

The recent summit between U.S. President Donald Trump and Chinese President Xi Jinping in Beijing has already reignited discussions on trade relations, with analysts suggesting the dialogue could lay the groundwork for a broader economic agreement.