New Delhi, June 6 (IANS) Cheap Chinese products have flooded the European markets, becoming a major technological rival for Europeans, who underestimated its capacity for innovation, according to a new report.

The European Union (EU) is apparently trying to “build a strategy that protects its industrial base without triggering a full-scale trade dispute with Beijing”, according to the report in Le Monde.

Beijing is now competing in innovation-driven and high-value-added production sectors, including artificial intelligence (AI) and energy.

China now accounts for around 30 per cent of global manufacturing output while representing only 13 per cent of global consumption.

Moreover, Chinese car exports to Europe rose 26 per cent between 2024 and 2025, to almost 1.2 million vehicles, despite tariffs introduced only a year earlier, according to another report in Atlantic Council.

Tariffs on Chinese electric vehicles were introduced in 2024, including 17 per cent on BYD, 18.8 per cent on Geely, and more than 35 per cent on SAIC.

However, tariffs failed to significantly slow Chinese market penetration. Brussels launched thirty-three trade investigations in 2024, and a similar number in 2025, many of them targeting China, said the report.

French President Emmanuel Macron recently warned that Europe could eventually be forced to “decouple” from China in strategic sectors if Beijing failed to address widening trade imbalances. Paris has also pushed to place currency distortions and global imbalances back onto the Group of Seven (G7) agenda.

According to the report, beginning in July this year, the EU will cut tariff-free steel quotas by 47 per cent, from roughly 33 million tonnes to 18.3 million, and will double out-of-quota duties from 25 percent to 50 percent through 2031.

The EU is also moving beyond traditional trade defence toward industrial policy, it added. The most consequential proposal now under discussion is the so-called “overcapacity instrument.” The mechanism would effectively create the EU’s version of Section 301 of the US Trade Act.

–IANS

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