According to Goldman Sachs, what is the primary factor dragging down European Union growth — China's bilateral trade deficit with the EU or competition from Chinese exports in third markets?

Goldman Sachs states that 'the bigger drag on European Union growth is losing market share to China rather than a widening trade deficit with the Asian country' and explicitly concludes: 'We estimate that this third-market competition, rather than the bilateral deficit itself, accounts for most of the European growth drag from China's export-led model.'

What specific sectors and trends does Goldman Sachs highlight as evidence of China's growing competitive pressure on EU exports, particularly in global and European markets?

Goldman Sachs highlights that the biggest impact has been in manufactured goods — especially transport equipment and industrial machinery — where China's cost advantage is most pronounced; it notes Europe's share of exported capital goods has fallen to 43% of global volume from 54% in 2005, while China's surged to 24% from 7%, including a 50% increase in machinery exports to Europe.

Europe growth hit more by China exports than bigger trade gap, Goldman says

Jul 2, 2026

Goldman Sachs states Chinese export competition, especially in machinery and basic chemicals, hinders EU growth more than the trade deficit. The EU plans targeted trade policies focusing on steel and chemicals rather than blanket tariffs.

reuters

2026-07-02

Europe growth hit more by China exports than bigger trade gap, Goldman says

Europe growth hit more by China exports than bigger trade gap, Goldman says

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