EU chamber in China flags manufacturing maladies, urging course correction in 5-year plan

A member-driven organisation representing European business interests in China is urging policymakers to seize the opportunity – while forming the nation’s next five-year plan – to rebalance the economic-development model and strike at the heart of cutthroat price competition that hurts both foreign and domestic firms.

“While consumption in China is actually growing, a core issue is that manufacturing output has grown faster,” reads the chamber’s “European Business in China Position Paper 2025/2026”. “Involution, expanding inventories, pressure on profit margins, decreasing asset utilisation and pressure to export are all natural consequences of this mismatch.”

Involution, a term for low-quality price competition fuelled by oversupply in certain sectors, has also caught the attention of senior-most Chinese officials, with President Xi Jinping criticising the competition in July as a lever for “destructive discounting” and “unproductive outcomes”.

China needs more action on the supply of goods, chamber president Jens Eskelund said at a news conference on Wednesday. With China’s manufacturing output growing faster than retail, he said, “you need to devote an equal focus on the supply side, and we haven’t quite seen that yet”.

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The Europe-China trade relationship: deficits, disputes and de-risking

The Europe-China trade relationship: deficits, disputes and de-risking