Europe could prosper as China’s trade ally rather than adversary

The European Commission has been clearly signalling its intention to wage a trade war against China. Brussels’ intent to counter the so-called China-shock-20" class="entity-link entity-topic" data-entity-id="135575" data-entity-type="topic">China shock 2.0 – the wave of subsidised Chinese exports such as electric vehicles (EVs), solar panels and batteries – is no longer merely a verbal threat but appears to be an imminent decision.Comparing current trade tensions between the European Union and China with the trade conflict between Europe and Japan in the 1970s and 1980s reveals striking similarities but also significant differences in terms of geopolitics, technology and state intervention. In both instances, European industry feared that imports from emerging Asian manufacturing hubs would undermine domestic production.During the 1970s and 1980s, Europe faced fierce competition from Japanese exports. Companies from Japan captured market share through high-quality, efficient production and competitive pricing. European policymakers were concerned about the deindustrialisation of sectors such as automobiles, consumer electronics and machine tools.