We are pleased to present the 9th issue of 2026 of John Lukacs Analyses on Global Affairs: 2026/9.The Second China Shock:A New Challenge for European Industry and the Global Economic Balance
- The second China shock is not simply another wave of Chinese exports, but rather the expansion of Chinese industrial and technological competition into higher-value-added sectors.
- China’s high savings and investment rates, weak domestic consumption, and the resulting excess production capacity are generating increasing export pressure. This pressure is reinforced by technological progress, economies of scale, highly integrated supplier networks, and state-led industrial policy.
- This development poses a particular challenge to the European economic model, which relies heavily on manufacturing. The risk extends beyond the loss of market share to the erosion of industrial value chains, technological capabilities, and economic autonomy.
- The EU’s trade-defence and economic-security instruments are important but insufficient on their own. Without improvements in competitiveness, innovation, energy costs, and financing conditions, market protection can only buy time rather than address the underlying structural challenges.
- Chinese investment offers significant short-term opportunities for Hungary, but it can generate lasting benefits only if it strengthens domestic technological capabilities and value added rather than merely creating additional assembly capacity.
You can read the full paper on the John Lukacs Institute website.