The European Central Bank found that China’s surge of low-priced exports to Europe is driven mainly by weak domestic demand and excess manufacturing capacity, rather than US tariffs, signalling a lasting shift in trade patterns.
The European Central Bank (ECB) reported, on 11 November 2025, that China’s surge of low-priced exports to Europe is driven more by weak domestic demand than by US tariffs.
According to the ECB, the trend began around 2021, when a slowdown in China’s housing market reduced domestic consumption and housing-related investment. At the same time, state-led efforts to support manufacturing created excess capacity, prompting firms to compete on price and increasingly sell abroad, sometimes even at a loss.
While rising US-China trade tensions could further divert exports to Europe, the ECB noted that the shift in Chinese trade patterns predates these tensions and reflects broader domestic economic factors, including declining consumer demand and strategic domestic manufacturing priorities.
These developments suggest that China’s import demand may remain subdued, widening the trade gap with Europe.
Earlier, on 25 April 2025, the EU Economic Commissioner Valdis Dombrovskis urged Chinese officials, including China’s finance minister and central bank governor, not to flood EU markets with goods redirected from the US due to tariffs imposed on Chinese products. He also warned the EU would act to protect its markets if Chinese imports became a major threat.
