b'DECEMBER 2025ANALYSIS & PERSPECTIVE 7China striking at heart of Europes industrial and innovation modelBy Stuart Todd, AJOTReturning from what was hisFrances colors to the mast, con-fourth state visit to China at thevincing its EU partners to do the end of last week, French Presidentsame, to form a united European Emmanuel Macron has threatenedfront, will be no simple task. For Beijing with tariffs in the comingexample, German firms still have months if it does not take mea- a strong presence in China. And sures to reduce its enormous tradehe admits that Europes biggest surplus with the EU. economy is not yet fully on board In an interview with Frenchwith the French approach. How-business newspaper, Les Echos,ever, under Chancellor Merz, it heclaimedthatChinawastooisbecomingawareoffthe strikingattheheartoftheimbalances that exist with China.Europeanindustrialandinno- Macrongoesontoargue vationmodel,whichhashis- thatthepathtorestoringbal-torically been based on machineance between Europe and China toolsandautomobiles,addingrequires efforts on both sides.thatPresidentDonaldTrumpsFirst, Europe must re-commit protectioniststancewasonlytoapolicyofcompetitiveness, making matters worse. (STRIKINGcontinued on The American response ispage 12) Steel coils are displayed at a ThyssenKrupp steel factory in Duisburg, Germany. REUTERS/Leon Kuegelerinappropriateandexacerbates ourproblemsbyredirecting Chinese flows massively to our markets, Macron pointed out.As a result, we are caught betweenthetwo,anditisa matter of life and death for Euro-pean industry. We have become the adjustment market, and that is the worst-case scenario.The EUs trade deficit with China is estimated to have sur-passed300billionin2024. The 27 European Union mem-berscannotsettradepolicy, includingtariffs,individually, instead being represented by the EU Commission.Macron underlined that Chi-nas rise and the unrivalled com-petitiveness of its industry was a serious issue for Europeans. Nev-ertheless, he remained hopeful that there was still a way to amicably resolve the unsustainable trade surplus between Europe and China and expressed his willingness to adopt a give and take approach with the Xi Jinping regime.However,hehadwarned theChinesethatiftheydid not respond, Europe would be forced, in the coming months, totakedecisiveactionand follow the example of the U.S., such as imposing tariffs on Chi-nese products.Macronindicatedthathe had discussed this with the Pres-ident of the European Commis-sion, Ursula von der Leyen.a utomobiLeS : F irSt - evert raded eFicitIn 2025, for the first time, Europe will have a trade deficit withChinaintheautomobile sector, and the situation is dete-riorating even more rapidly for automotivepartsaccordingto OEM sub-contractors.Andthisdevelopmentis notjustdowntothesteady growth in Chinese car volumes heading for markets in the EU andtheUKbutalsoexports ofvehiclessuchastheBMW Mini,VolkswagenCupraand Tesla Model 3 made in China - a result of Western manufac-turersseekingoutlower-cost manufacturing conditions.As recently as 2022, the bal-ancewaspositive,inEuropes favor, at 15 billion.e veningo ut thep LayingF ieLdWhileMacronhasnailed'