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European companies operating in China are contemplating adjustments to their supply chain strategies amid a growing list of challenges, including heightened exposure to trade conflicts and unpredictable policy changes. According to a recent report from the European Union Chamber of Commerce in China, while cost considerations remain important, the increasing uncertainty in economics and trade is significantly influencing supply chain planning.
Most firms are re-evaluating their approaches to manage their presence in this vital market while safeguarding the resilience of their global operations. Over 70% of the chamber’s 1,700 member companies have reviewed their supply chain strategies related to China within the last two years. Among them, 21% plan no major changes, 26% are partially or fully relocating parts of their supply chains to other regions in China, and 13% are establishing alternative supply arrangements outside of China or offshoring segments of their supply chains.
“There’s a noticeable shift from ‘just in time’ to ‘just in case,’” stated a chamber executive during a media briefing in Shanghai. “However, the complexity and uncertainties involved make the ‘just in case’ approach somewhat overwhelming, leading many companies to consider going back to ‘just in time’ logistics.”
Diversification is also evident among suppliers, with nearly half of the chamber’s members reporting that their Chinese suppliers are relocating operations to other markets such as Southeast Asia, North America, and India. This reflects a broader trend toward regional manufacturing.
While China remains the world’s leading manufacturing powerhouse, praised for the efficiency and competitiveness of its supply chains, longstanding issues—such as a trade surplus with the EU that has reached approximately EUR 400 billion (USD 480 billion)—continue to pose challenges. Trade imbalances in container shipments have worsened from 1:2.7 in 2019 to about 1:4 today.
Recent export restrictions on rare earth elements, implemented last April, caused disruptions for some European firms who reported lengthy delays in obtaining necessary licenses. Despite these hurdles, e-commerce continues to thrive, with data indicating that over 2,400 overseas brands entered China’s market last year, doubling the previous year’s growth. Currently, the platform features over 40,000 international brands from more than 110 countries.
Trade between China and the EU increased by 6% in 2025 to approximately CNY 5.93 trillion (USD 853.8 billion), with more than a quarter of the traded products being high-tech items. Imports and exports of high-tech goods saw growth of 11% and 7.5%, respectively, highlighting ongoing technological cooperation despite rising tensions.
Relations have become more strained, with the EU conducting multiple anti-subsidy investigations into Chinese products and tightening investment screening procedures. China faced 198 World Trade Organization inquiries in 2024, nearly 60% initiated by developing countries, indicating concerns of broader international scope.
Export controls on advanced technology, such as high-end lithography equipment, are viewed as artificial restrictions that limit mutual growth opportunities. Industry experts suggest that Europe should adopt a more open stance towards Chinese investment, as promoting localized production could improve trade balances, create jobs, and foster innovation, ultimately supporting broader goals like re-industrialization rather than solely focusing on welfare or military expenditures.
On the regulatory front, China is actively working to facilitate the import of European agricultural and consumer goods through measures like hosting major trade events and opening markets. Both sides are encouraged to continue dialogue and cooperation, manage disagreements constructively, and uphold the principles of free trade and multilateral systems.
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