EU Hostility to Chinese 'Unfair Competition' Masks Discomfort With China's State Discipline of Capital
Source: Alexandra Gerasimcikova. "The EU Fears China’s Power Over Private Capital." November 2, 2026. jacobin.com
The Gist
The author argues that when European leaders complain China competes unfairly, they are really uneasy about how firmly China's government steers its businesses toward national goals, something Europe refuses to do with its own companies. China's state-owned firms, planned subsidies, and public-private clusters have delivered cheap power and industrial strength, while Europe's profit-first approach has left it stagnating. The author suggests Europe should learn from China rather than just complain.
Conclusion
European leaders' complaints about Chinese 'unfair competition' obscure their real objection: China's political economy subjects private capital to strategic state direction, which the EU is unwilling to impose at home. The EU could instead learn from China's strategic planning.
Premises
- China maintains a large, strategically central SOE sector (62% of global SOE assets, versus 14% for Europe after privatization) that can pursue long-term, low-return, capital-intensive investment rather than prioritizing profit.
- Politically guided public investment let China achieve the world's highest electrification rate, clean-tech leadership, and cheap electricity, whereas Europe relied on private profitability and saw stagnant electrification, rolled-back green policies, and industrial electricity prices 50% above China's.
- China integrates public and private sectors through industrial clusters, special economic zones, public bank financing, and CPC units in firms, giving the state considerable control over private capital (e.g., market access limits and tax recovery campaigns).
- Chinese subsidies are part of a long-term plan and are adjusted or phased out as industries mature (e.g., the CATL and EV subsidy cases), unlike Western reluctance to use strategic, time-bound subsidies.
- European firms such as Volkswagen prioritize shareholder payouts and profit-margin targets over investment in innovation, and then cut jobs when they lose competitiveness; this shows the costs of leaving capital undisciplined.
- European leaders such as Merz and Macron frame China's model as unfair competition, citing state intervention, overcapacity and subsidies, while the EU limits its own public investment role out of fear of 'crowding out' private capital.
Assumptions
- China's economic success, particularly in clean tech and electrification, is largely attributable to state direction of capital rather than other factors.
- Chinese practices are transferable to the EU's different political and institutional context.
- European leaders' stated concerns about unfair competition are pretextual or secondary, and the deeper motive is aversion to disciplining capital.
- State-led planning produces better social and economic outcomes than market-led approaches in strategic sectors.
- The costs of China's model, such as overcapacity, authoritarian control and labor repression, are outweighed by its benefits or are not relevant to the comparison.