Can Europe survive China Shock 2.0?

"China Shock 2.0" is driving significant deindustrialization across Europe, particularly within the German automotive and machinery sectors. Fueled by massive state-directed subsidies and China's "dual circulation" strategy, this export surge threatens to hollow out European industrial capacity. Experts Constanze Stelzenmuller and Kari Heerman highlight that Europe’s historical reliance on open markets is increasingly untenable, necessitating a shift toward strategic economic autonomy. To counter these distortions, Europe must leverage its collective market scale, enhance internal integration—such as banking and energy grids—and adopt more robust trade defense measures. While Europe faces severe domestic political pressures and fiscal constraints, the necessity of maintaining industrial competitiveness is forcing a convergence in policy. Moving forward, Europe must navigate a "managed interdependence" with China, balancing the need for economic security against the risks of a costly, destabilizing trade war.