The malaise runs deep. China\u2019s brutal price war<\/a> has forced numerous industries to slash costs to remain competitive, causing sustained deflation and declining profitability for both domestic and foreign businesses.<\/p>\n Domestic demand and consumption have also remained weak, despite Chinese President Xi Jinping\u2019s<\/a> efforts to \u201cvigorously boost consumption\u201d through monetary and fiscal stimulus.<\/p>\n Underscoring these structural problems, China\u2019s economy is expected to grow by just 4% this year, according to the International Monetary Fund\u2019s<\/a> latest forecast. This is short of Beijing\u2019s 5% target, and well below the 9% average yearly expansion<\/a> since China opened itself up to the global economy in the late 1970s.<\/p>\n A growing economy once made China\u2019s long-standing regulatory hurdles and \u201ccomplicated\u201d rules manageable, but they have now become far more \u201cpainful,\u201d Dunnett added.<\/p>\n Critical concerns<\/p>\n Trump\u2019s trade war has not disappeared entirely from the radar. Dunnett warned that it has triggered an \u201cacute\u201d difficulty for EU firms\u2019 access to rare earths, which are vital for both military hardware and high-tech consumer goods, including computers and electric vehicles.<\/p>\n China, which accounts<\/a> for roughly 70% of global rare earth mining and 90% of the world\u2019s refining capacity, slapped export controls on the minerals shortly after Trump\u2019s announcement of sweeping \u201creciprocal tariffs<\/a>\u201d on US trading partners in April.<\/p>\n The measures require foreign firms to apply for special export licences, which can take months to be approved. Despite Ursula von der Leyen\u2019s<\/a> announcement of an \u201cupgraded supply chain mechanism\u201d to address rare earth \u201cbottlenecks\u201d at the EU-China summit<\/a> in July, Dunnett said that EU firms are still struggling to acquire the licences.<\/p>\n \u201cWe thought we were going in a good direction, but there were some issues in August, and then in September, we saw a significant increase in companies coming to us saying that they haven\u2019t got the approvals that they need, and now it\u2019s leading to production stoppages,\u201d Dunnett added.<\/p>\n China-EU: Xi wants more trust, von der Leyen urges \u2018real solutions\u2019<\/p>\n \n\t\t\t\t\tChinese President Xi Jinping said China and the EU must deepen trust in a turbulent\u2026\t\t\t\t<\/p>\n \n\t\t\t\t\t4 minutes\t\t\t\t<\/p>\n \t\t\t\t\t The new export licence regime has severely aggravated tensions between Beijing and Brussels, which were already deeply fraught over China\u2019s close ties to Russia and its yawning global trade surplus, which grew to a record<\/a> \u20ac850 billion in 2024.<\/p>\n Von der Leyen also recently cited the export controls as a key reason why the EU should accelerate its efforts to \u201cde-risk<\/a>\u201d from its second-largest trading partner, while Trump has lobbied the bloc to impose 100% tariffs on Beijing over its refusal to force Moscow to end its war in Ukraine.<\/p>\n Dunnett conceded that \u201cthere is a lot of pressure on the EU coming from the US\u201d over its relations with Beijing, but stressed that \u201cde-risking from China is not the same thing as de-prioritising China, or not doing business with, or attaching less attention to China\u201d.<\/p>\n However, he warned that rising EU-China tensions have made the business environment for European firms increasingly unstable. He pointed to Brussels\u2019 imposition<\/a> of tariffs of up to 45% on Chinese EVs last year \u2013 and Beijing\u2019s retaliation against EU pork<\/a> and dairy<\/a> producers \u2013 as underscoring this point.<\/p>\n \u201cWhat changed last year? The Chinese economy would be my first one. But predictability would come second,\u201d Dunnett said. \u201cYou think you\u2019re safe in one industry. And, all of a sudden, there\u2019s some sort of political dispute you think you\u2019ve got nothing to do with \u2013 and, all of a sudden, you\u2019re hit as a result.\u201d<\/p>\n (mm)<\/p>\n","protected":false},"excerpt":{"rendered":"China\u2019s economic slowdown is a far greater source of anxiety for European companies than the fallout from Donald…\n","protected":false},"author":2,"featured_media":462532,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5174],"tags":[2000,299,5187,1699],"class_list":{"0":"post-462531","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-eu","8":"tag-eu","9":"tag-europe","10":"tag-european","11":"tag-european-union"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/115292151187284819","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/462531","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=462531"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/462531\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/462532"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=462531"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=462531"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=462531"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"China-EU:](\"https:\/\/www.europesays.com\/uk\/wp-content\/uploads\/2025\/09\/12868014-e1753359619299-800x500.jpg\")
\t\t\t<\/p>\n