US and Europe Reduce Reliance on China as Trade Imbalances Grow

1-Minute Brief

Efforts by Western countries to limit dependence on China are prompting warnings about economic risks and shifting global trade dynamics.

Key Facts

• The US and Europe are seeking to reduce their reliance on China, according to recent reports.
• Beijing is tightening control over its supply chains in response to these Western moves.
• A Brussels thinktank, the Centre for European Reform (CER), warned that Germany could face deindustrialisation similar to what the US experienced 25 years ago.
• China's trade surplus with Germany doubled between 2024 and 2025, rising from $12bn to $25bn, resulting in a $94bn trade imbalance, according to CER.
• The CER stated, 'China has already eaten much of German industry’s lunch and is preparing to start on dinner.'

What Happened

Western countries, including the US and Germany, are taking steps to reduce economic dependence on China, while Chinese authorities are increasing control over supply chains. A Brussels thinktank has raised concerns about the impact on German industry.

Why It Matters

These developments could reshape global supply chains and trade relationships, with potential consequences for industrial competitiveness and economic stability in Europe and beyond.

What's Next

Observers are watching how Western governments and industries adjust their strategies, and how China responds to efforts to limit its economic influence.