Many European businesses remain alarmingly unprepared for a potential China shock, according to a recent survey. Experts express concern that companies acknowledge geopolitical pain but fail to take significant action. For example, the ongoing war in Ukraine has affected 81 percent of businesses surveyed.
However, only 10 percent had concrete plans for a similar contingency in Taiwan. Furthermore, a substantial 59 percent had neither prepared nor planned for such events. “Companies know that they can feel the pain of geopolitics disrupting their everyday business operations,” explained one study co-author. “They have such a clear example, but haven’t done much with that.”
This same vulnerability extends to companies’ reliance on China. Just 24 percent of questioned firms plan to reduce their dependence on Chinese suppliers. By contrast, only about one-third are considering strategic stockpiles of critical raw materials. China’s existing export controls, including on rare earths, have already exposed these critical dependencies.
“It is, to me, quite shocking that we’re not seeing more stockpiling or diversifying of suppliers,” another China expert commented. This applies especially to areas already identified in ongoing trade and technology conflicts. Nearly one-third of respondents reported negative effects from U.S.-China trade and tech restrictions; among firms operating directly in China, this share climbed to around half.
Meanwhile, Brussels is preparing a diversification instrument to reduce reliance on single suppliers. This initiative aims to strengthen supply chains across the continent. The EU also seeks to tackle a daily goods trade deficit with China, currently standing at roughly €1 billion. An EU Trade Commissioner is expected in Beijing in October, with potential EU countermeasures if talks prove unsuccessful.
However, the EU’s influence on major U.S.-China negotiations remains uncertain. A forthcoming meeting between U.S. President Donald Trump and Chinese leader Xi Jinping may bring suspended Chinese export controls back onto the agenda. “Does the EU have a seat at this table? I rather doubt that,” noted a survey co-author, highlighting concerns about the bloc’s leverage.
