When Xi Jinping took power in 2013, many expected China to become the EU’s top export market. But in a twist few would have predicted back then, 2025 will mark the Swiss Switch: EU exports to Switzerland are set to overtake those to China by 20%. The shift was already in motion after COVID, and last year Swiss demand reached 91% of the China level.
More than a decade into Xi’s rule, the EU now sells more across the Alps than across the Great Wall.
For years, it looked like Germany alone matched the rest of the EU in exports to China. But once car shipments are excluded, a different story emerges: from 2013 to 2025, Germany’s non-car exports to China consistently lagged behind those of the EU26.
The apparent supremacy was driven almost entirely by auto sales — and when those dipped from 2019 onward, the illusion of parity vanished.
Between 2013 and 2018, (below) figures suggested a 1:1 balance: Germany exported as much to China as the other 26 EU members combined. However, this balance was masked by Germany’s dominant car exports.
Once auto sector is stripped out of both datasets, see what happens:
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EU26 non-car exports to China consistently exceeded those from Germany every single year between 2013 and 2025.
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The turning point in raw totals came in 2019, when even including cars, Germany fell behind the EU26 in total exports to China (see first graph), mainly due to a sharp drop in car sales.
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The reality (excluding the auto sector) reveals that the EU26 has always had a broader and more diversified export base to China.
Germany’s export clout was actually riding on four wheels. As car exports lose steam, the rest of the EU emerges as a more resilient and diversified exporter. This has implications for both EU trade policy and economic forecasting: Germany may need to rebalance.
On 5 June 2025, BEUC — the umbrella group representing 45 independent consumer organisations — filed a complaint against SHEIN with the European Commission and national consumer authorities. The complaint concerns SHEIN’s use of the following practices
deceptive practices (‘dark patterns’) that drive the over-consumption of fast fashion.
This is a breach of the EU’s Unfair Commercial Practices Directive. These illegal practices drive consumers to purchase more clothing than they might have done otherwise.
We’ve been exploring the promising new Trade Diversion Monitoring Tool announced by the EU on June 5. As EU trading partners increasingly impose restrictive trade measures, there is a growing risk that goods originally intended for non-EU markets are being redirected into the EU’s internal market.
This year, 6 out of every 10 swimsuits imported by the EU come from China, up from 5 last year.
The European Commission investigated China’s practices in public procurement for medical devices. The report, issued in January 2025, is appalling. Now, EU governments have backed a European Commission proposal to impose limits on Chinese medical device suppliers bidding on public contracts.
The China Chamber of Commerce to the EU, a Chinese lobbying group, deplores the decision.
A year ago, a full-page spread by the National Committee of the Chinese People’s Political Consultative Conference featured Xi Jinping asserting that “there is no such thing as China’s overcapacity.”
Unfortunately, the China Automobile Dealers Association now strongly disagrees. Alarmed by a price war that only worsened in the second quarter of 2025, the association warns that the race to the bottom is threatening the very survival of growth in the automotive sector. It is calling on automakers to align production with actual market demand.
Actually, we don’t see Xi’s denial of overcapacity as a mere misjudgment. Rather, we believe it reflects an official fiction, carefully maintained by the Party to project a facade of stability. It’s not just a disconnect from reality, but a Party-imposed narrative.
China’s 13th Five-Year Plan (2016–2020) overestimated Shanghai Micro Electronics Equipment (SMEE)’s ability to develop lithography tools for mature chip nodes. By 2021, a serious wake-up call arrived.
It became clear that SMEE was falling behind, U.S. sanctions were tightening, and the Dutch government was preparing new export controls. Chinese chipmakers then rushed to secure DUV machines from ASML—before the window closed.
Officially, the 13th FYP was Xi Jinping’s plan, however it carried yet strong momentum from previous leaders.
However, today’s reality is different. Xi has brought greater centralization and reduced adaptability, while overpromising on ambitious tech goals. The risk of isolation and detachment from market constraints is growing. Ironically, these are the very shortcomings Kissinger, despite being a longtime admirer of China, once criticized in the Soviet Union’s Five-Year Plans. He wrote in his book Diplomacy (1994):
There is no accountability in a planned system
Today, one of Xi’s risks may be becoming the sole person accountable for the success or failure of China’s ambitious plans.
Two years ago, Xi Jinping made it crystal clear: despite all the hype around “new productive forces,” abandoning low-end manufacturing was never part of the plan. In contrast to the EU, where every million dollars in exports supports 8 to 13 jobs, the same figure in China sustains an estimated 50 to 70 jobs. A massive loss of labor-intensive production would be politically and economically untenable. The “Cheap China” segment must continue.
When Xi came to power in 2013, low-end goods made up 24% of China’s total exports. Twelve years later, that share has risen to 27%.
China’s strategy is not just about climbing the value chain. It is also about holding onto the bottom rungs. The aim is scale and sophistication: to dominate both high-tech and low-cost segments. It reflects a state-led approach to controlling the entire spectrum of global supply, maximizing employment, trade surplus, and geopolitical leverage. This is not just about moving up. It is about not letting go of what has worked for the Party for years.
China’s consumer goods trade-in program has generated 1.1 trillion yuan in sales in the first five months of 2025, according to the Ministry of Commerce. That implies two things:
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First, the government now drives 1 in every 20 yuan of retail sales.
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Second, without the trade-in boost, total retail sales would be down 0.7% year-on-year
The data covers the period from January to April.
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Sparkling wines up 19% in volume, down 9% in value
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Still wines volume flat, up 31% in value
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Bulk wines down 20% in volume, price per liter increased 37%
Source China Customs
Back in March, we estimated that trade turmoil would shave 2 percentage points off global GDP growth. That forecast assumed a trade-to-GDP elasticity of ~0.3 and expected the shock to remain confined to goods, with services continuing to grow. We alerted that
“With worsening conditions likely before any improvement, our forecast might not be grim enough”
Since then, things have deteriorated — services are now affected too. The OECD’s latest forecast suggests that even our grim outlook was too mild:
Using roughly the same elasticity, they estimate an 18% drop in global trade would translate into a 5% decline in global GDP.
Vietnam’s Prime Minister is touring the EU, presenting his country as a bridge to ASEAN and a future hub for Southeast Asia.
In the pic, SOAPBOX co-editor Ilaria Perla greets Vietnamese Prime Minister Pham Minh Chinh
In late 2024, the Politburo issued Resolution No. 57 to unlock Vietnam’s technological potential. The Prime Minister is calling for stronger EU engagement in trade, investment, and technology transfer. Overall, Vietnam is positioning itself to scale up as a manufacturing and export powerhouse.
As for trade issues, Vietnam remains on the U.S. Treasury’s monitoring list of major trading partners flagged for potential currency manipulation. The latest report from June 2025 includes several Asian economies: China, Taiwan, South Korea, and Singapore.
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