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Economy

China’s Export Surge: Is Europe Next in the Crosshairs of Trade Diversion?

Chinese exports to Europe surge, possibly due to US tariffs. EU businesses face challenges; EU Commission isn’t alarmed.

byAndres Castro

September 24, 2025, 10:49 AM

Executive Summary

Jens Eskelund of the European Union Chamber of Commerce in China expresses concern over a significant increase in Chinese exports to Europe, potentially due to trade diversion from US tariffs, alongside Chinese firms’ competitiveness, a weaker currency, and state support.

A survey reveals 73% of European companies find doing business in China harder, with confidence at an all-time low, citing the Chinese economy’s state, intense competition, and overcapacity.

The European Commission currently maintains that there is no evidence of a major trade diversion or export increase significant enough to be a cause for alarm.

The Story So Far

The current concerns over a potential surge in Chinese exports to Europe are largely driven by a suspected “trade diversion” following Washington’s imposition of sweeping import tariffs on China in April. This shift is exacerbated by the robust competitiveness of Chinese firms, a weaker Chinese currency, and substantial state support, alongside significant overcapacity in some Chinese sectors, all of which are creating pressure for European businesses operating in China.

Why This Matters

The observed surge in Chinese exports to Europe, potentially driven by a “trade diversion” following President Trump’s tariffs and bolstered by China’s domestic competitiveness and state support, is creating significant pressure on European businesses, both within China and through the potential for low-priced imports impacting local producers. This situation highlights a growing divergence in perspective, with European business leaders expressing alarm over a challenging and politicized environment, while the European Commission currently maintains a more cautious stance, stating there is no immediate cause for concern.

Who Thinks What?

Jens Eskelund, president of the European Union Chamber of Commerce in China, believes a significant increase in Chinese exports to Europe may be partly due to “trade diversion” following US tariffs, alongside Chinese firms’ competitiveness, a weaker currency, and substantial state support.

The European Commission, through spokesperson Olof Gill, currently assesses that there is no evidence of a major increase in Chinese exports to Europe that is a cause for alarm.

Jens Eskelund, president of the European Union Chamber of Commerce in China, has voiced concerns over a significant increase in Chinese exports to Europe. This potential surge, he suggests, may be partly attributed to a “trade diversion” following Washington’s imposition of sweeping import tariffs in April. However, the European Commission currently maintains that there is no evidence of a major trade diversion causing alarm.

Drivers of Export Growth

During an interview on Tuesday, Eskelund noted a decline in Chinese exports to North America during the first half of the year, leading him to consider trade diversion as a contributing factor to the shift towards Europe. Beyond this, he identified the robust competitiveness of Chinese firms, a weaker Chinese currency, and substantial state support as primary drivers behind the observed export surge. These factors, he indicated, are creating pressure for European businesses operating in China.

Challenges for European Businesses in China

The latest survey by the EU Chamber of Commerce in China paints a challenging picture for European companies. A significant 73% of respondents reported that doing business in China is becoming harder year after year, with confidence reaching an all-time low. Furthermore, more than half (52%) indicated that the business environment had become increasingly politicized compared to the previous year.

Eskelund attributed the prevailing pessimism primarily to the state of the Chinese economy, highlighting intense competition across various sectors and overcapacity in others. He suggested that the sentiment could improve if Beijing focuses on rebalancing supply and demand. “We really think the Chinese government right now needs to focus on how do we get back to a situation where demand and supply are in better alignment than is the case today,” he argued.

EU Commission’s Stance

The potential for shifting trade flows from the US to Europe carries serious implications for European industries, particularly if imports are offered at very low prices, which could strain local producers. Despite these concerns, EU Commission spokesperson Olof Gill stated on Monday that the Commission’s current assessment does not indicate an increase significant enough to be a cause for alarm. “Our assessment at present moment is that there is no such increase that is a cause for alarm,” Gill told reporters.

Outlook on EU-China Trade

The discussion surrounding rising Chinese exports underscores the complex dynamics at play in global trade, influenced by international tariffs and China’s domestic economic conditions. While European business leaders in China articulate growing concerns, the European Commission currently holds a more measured view, highlighting the differing perspectives on the immediate impact of evolving trade patterns on the EU market.