The impact of China’s industrial rise on the euro area

Alessandra Amicucci, Nicolò Gnocato, Vanessa Gunnella, Clara Lindemann, Alfonso Merendino and Carlos Montes-Galdón

Economic Bulletin Boxes, 2026, vol. 3

Abstract: China’s industrial rise is a key external force influencing euro area trade, production and prices by reducing costs for euro area companies, via intermediate inputs, and increasing competitive pressures in European and global markets. Econometric analysis shows that the increase in the exposure of the euro area to intermediate goods imports from China has been positively associated with industrial production growth, whereas the increase in imports of final goods from China has tended to weigh on production. Model-based simulations can capture the increase in competitive pressures from China via sector-specific productivity shocks. The simulations suggest that, at the aggregate level, EU GDP increases in the short term, driven by positive income effects owing to cheaper imported goods and by reduced production costs resulting from cheaper imported inputs, while inflation declines. JEL Classification: D24, E31, E32, F12, F13, F14, F40, L25, L60

Keywords: China shock; Production Networks; Productivity; Trade (search for similar items in EconPapers)
Date: 2026-05
Note: 2700331
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.ecb.europa.eu//press/economic-bulletin ... 2~7df7facd9a.en.html (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbbox:2026:0003:2

Access Statistics for this article

More articles in Economic Bulletin Boxes from European Central Bank 60640 Frankfurt am Main, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Official Publications ().