China's Import Penetration in EU Markets in 5 Sensitive Sectors

EUROPEAN UNION (EU), FRANCE, GERMANY, 13 OCTOBER 2026 —

French and German Governments Warn of ‘Massive Industrial Shock’ from China in Key EU Sectors—Data Shows Mixed Evidence of Market Disruption

While the governments cited no supporting data, new trade analysis reveals divergent trends: China’s market penetration has surged in volume across most sectors, but price undercutting is not consistently evident, with some evidence suggesting strategic pricing shifts rather than outright dumping.

The analysis, conducted using Trade Data Monitor and EU’s 2025 PRODCOM classifications, tracks Chinese and non-Chinese import volumes and unit prices to the EU from 2023 to 2026. It excludes intra-EU trade and benchmarks Chinese dynamics against rivals to assess whether Europe’s concerns over "China Shock 2.0"—a resurgence of disruptive Chinese exports—are justified. The findings, presented by Simon J.

Evenett, Professor of Geopolitics at IMD Business School, suggest selective sectoral vulnerabilities rather than a uniform threat.

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Pharmaceuticals: Volume Surge, No Clear Price Dumping EU imports of pharmaceuticals from China grew far faster than those from other non-EU suppliers, particularly after 2025. While Chinese unit values rose slightly—indicating no aggressive price undercutting—the volume increase was exceptionally sharp. However, removing one influential HS product code (likely a high-volume, low-margin item) substantially narrowed the price divergence, suggesting the sector’s dynamics are driven by specific product categories rather than systemic dumping.

The data shows no evidence of non-Chinese suppliers losing market share due to price competition.

Automotive: Volume Explosion with Falling Chinese Prices China’s automotive exports to the EU surged while imports from other non-EU suppliers declined by around 10% since early 2023. Notably, Chinese unit prices fell even as rivals’ prices rose, a trend that persisted after excluding one key HS code. This suggests China is not only capturing market share but also offering competitive pricing, though rivals’ price hikes indicate supply chain or demand-driven factors beyond simple undercutting.

The sector shows the clearest evidence of Chinese volume dominance paired with relative price flexibility.

Machine Tools: Volume Growth with Rising Prices Unlike other sectors, China’s machine-tool exports to the EU rose moderately while non-Chinese imports slightly declined. Crucially, Chinese unit values increased—the opposite of a dumping strategy—while rival prices fell. No HS code met the outlier exclusion criteria, meaning the trend is broad-based. This implies China is not just expanding market share but also premiumizing its offerings, potentially targeting higher-value segments.

Chemicals: Moderate Volume Growth, Relative Price Decline Chinese chemical imports grew moderately, outpacing declines in non-Chinese supplies. However, removing one influential HS code (likely a bulk commodity) reduced the volume gap, showing sensitivity to product composition. Unit prices for both Chinese and rival imports declined, with China’s drop slightly sharper post-2025. The data suggests increased penetration without clear evidence of dumping, though the volume trend is product-specific.

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Market Impact and Sector-Specific Insights The analysis underscores three key patterns: 1. Volume Disruption: China’s market share gains are sector-specific and volume-driven, with the automotive and pharmaceuticals sectors showing the most pronounced shifts. 2. Price Dynamics: No sector exhibits consistent price undercutting by China. Instead, pharmaceuticals and chemicals show stable or rising unit values, while automotive reveals falling Chinese prices—a possible strategy to penetrate high-growth segments. 3.

Outlier Sensitivity: The influence of a few high-volume HS codes (e.g., bulk chemicals or specific automotive parts) distorts aggregate trends, meaning policy responses must account for product-level nuances.

For Malaysian and regional readers, these trends carry implications: - Malaysia’s pharmaceutical and automotive sectors, which rely on EU exports, may face increased competition from Chinese suppliers if volume growth continues. The lack of price undercutting suggests China’s strategy is market share expansion via volume, not predatory pricing. - Chemical and machine-tool exporters in Southeast Asia could see shifts in EU supply chains, particularly if China’s premiumization strategy (e.g., higher-value machine tools) gains traction.

- Policy Watch: The EU’s non-paper signals potential trade barriers or subsidies targeting China, but the data suggests selective interventions—such as product-specific tariffs or anti-dumping probes—may be more effective than broad measures.

--- Outlook: Next Steps and Uncertainties The French-German non-paper has not yet triggered official EU action, but the European Commission is expected to review trade data and consult with industry stakeholders. Key questions remain: - Will the EU target specific HS codes (e.g., bulk chemicals or automotive parts) rather than entire sectors? - Could Malaysia’s trade ties with China (e.g., via the Regional Comprehensive Economic Partnership, RCEP) be affected if the EU imposes non-tariff barriers?

- Will China adjust its export strategies in response, possibly raising prices or shifting to higher-value segments as seen in machine tools?

The analysis, while not yet official, provides the first granular evidence of China’s EU market penetration. As the EU debates industrial resilience, the distinction between volume growth and price undercutting will shape whether protectionist measures or adaptive trade policies prevail. For now, the data suggests China’s challenge is not predatory pricing but scalable production and niche market dominance**—a shift that could redefine global supply chains.

Related: Simon J. Evenett