Since 2013, EU imports from China grew 7.3% a year, while exports rose just 4.3%.
In early 2025, the gap widened further: imports jumped 18%, exports dropped 7%.
Trade is underperforming output. In a healthy, globalized expansion, international trade typically grows faster than global GDP. For decades, the ratio of trade growth to GDP growth hovered above 1.5, sometimes more. Trade wasn’t just a reflection of economic growth — it amplified it.
But that dynamic is shifting. In the 2020s, the relationship between trade and growth has become more two-way — and increasingly, trade weakness is acting as a drag on growth rather than a consequence of it.
The IMF’s April 2025 projections underscore this reversal: global GDP is expected to grow by 2.8%, while trade volumes are forecast to rise by just 1.7%. That implies a trade elasticity of roughly 0.6 — far below historical norms. Such a gap suggests that trade is not only lagging but is now part of the problem.
This decoupling reflects deeper structural shifts — above all, geopolitical fragmentation, and a broad rethinking of global supply chains.
As a result, trade is no longer the reliable growth multiplier it once was. In 2025, the weakness in trade may not merely reflect subdued global demand — it may be helping to cause it.
Chinese state media considers Von der Leyen’s trade diversion fears a pseudoproposition—an illusion of sorts in her mind.
Look at what happened in Q1 with the flow of parcels from Shein, Temu, and other platforms to the EU and the U.S. after the U.S. cancelled its de minimis threshold, while the EU kept it in place.
Chinese e-commerce shipping to the U.S. plunged by 65% in volume, while shipping to the EU increased by 28%. Additionally, EU imports from Vietnam skyrocketed by nearly 30% in the first two months of 2025. We find VDL’s fears well-founded.
With EU ties severed and China firmly in the picture, the who’s who symbolism says it all: Xi is now set to top Putin’s guest list for the May 9 celebrations in Moscow.
Germany accounted for 46% of EU exports to China last year. In early 2025, that share fell to 40%—not because other member states exported more, but because German exports to China dropped by 19% year-on-year.
The CIF price per unit of volume fell by 7%.
(Note: EUROSTAT figures for Jan–Feb reflect shipments made by China late last year)
In December, BYD pivoted to hybrids for Europe after adviser Alfredo Altavilla warned that pure EVs remain a tough sell, with hybrids avoiding EU tariffs. Tesla exports from China to the EU have also been affected.
Whether hybrids or pure electric, EU imports grew only 5% in January-February, cooling China’s expectations after the initial export exuberance.
We took a quick look at around 40 companies making pure electric cars in China. Only three are profitable in the EV business: Tesla (not Chinese), a fully state-owned firm, and BYD. Some of the others might be making money with combustion cars or hybrids, but definitely not with BEVs. And that’s just from the ones we checked — there are probably a hundred or more out there. In fact, we doubt there’s an exhaustive list of Chinese companies in the BEV production business.
Immersed in the hype cycle created by China’s government, inflated expectations and a self-fulfilling prophecy are at play — a pattern not uncommon in China.
In Q1 2025, exports of BEVs fell to $6 billion, down from $8 billion a year earlier. Alternative markets failed to offset the shortfall caused by the EU’s punitive measures, with shipments to the bloc plunging 44%. Hopes for growth in Brazil will have to wait — exports of pure electric cars there tumbled by a staggering 77%
Tesla did not begin deliveries of the refreshed Model Y produced in Shanghai to international markets until April 14, missing all of Q1.
Meanwhile, China Customs revised its electric vehicle classification to differentiate between units with and without VIN codes. Those without VINs now represent 6% of BEV exports.
On April 24, the Ministry of Commerce spokesperson said that following the April 8 video meeting between Minister Wang Wentao and European Commission Executive Vice President Valdis Dombrovskis, Chinese and EU technical teams have continued close communication on issues related to the EV price undertaking.
However, it’s worth noting that this statement is identical to what the spokesperson said on October 26, with no new developments or changes in the position
Despite the official narrative denying it, the blatant overcapacity in certain sectors has prompted even state-owned media (经济日报) to express concern over the GDP-only focus in political performance, which leads to resource waste and low efficiency. The blame is mostly directed at local governments, not the central leadership.
Taking the photovoltaic industry as an example, the lack of demand and the cut-throat competition of enterprises have led to a rapid decline in the sales price of each link of the main photovoltaic industry chain. In the first 10 months of 2024, the prices of polysilicon, silicon wafers, cells, and modules fell by 38%, 49%, 30.4%, and 28.8%, respectively, and the output value of China’s photovoltaic manufacturing fell from about 1,374.4 billion yuan in the same period of 2023 to 781.1 billion yuan, a year-on-year decrease of 43.17%.
China: Pork imports from the European Union. Figures in thousand ton
Footwear ranks among China’s top 15 exports, totalling $51 billion. While it gets little attention in official narratives compared to the so-called “new drivers of growth,” it still represents 1.5% of total exports and supports hundreds of thousands of jobs.
In a sign of the times, the industry cut the average FOB price per pair (in renminbi) by 13%. That drop—measured at the point of origin in local currency—led to a modest 3% increase in export volume in Q1 2025 compared to the same quarter last year.
Prior to 2023, the European Union used a single import code for allmetal permanent magnets, including those containing rare-earth elements. For instance, NdFeB imports before 2023 were classified under the code 8505 11 00, which made it difficult to identify these imports in current data specific to rare-earth materials.
In 2022, the EU revised this classification, introducing separate codes to track rare-earth magnets more effectively:
Data from 2023 and 2024 now reveals that 92% of permanent magnets made from rare-earth metals imported by the EU, by volume, originate from China. Not that there were many doubts, but now it’s crystal clear.
China never exported any gold to Iran—until last year.
According to China Customs, 5.8 tons were shipped in 2024.
In just the first quarter of 2025, exports reached an additional 3.3 tons—already nearly 60% of last year’s total. Even Mehr News, a semi-official Iranian outlet promoting Islamic values, ran a short news item expressing surprise.
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