China wreaks its economic revenge on Europe

Mark O'Neill July 02, 2026 18:15

“It is time to buy a new electric vehicle to replace this Kia,” said Mohammed Ahmad, a London taxi driver. “To keep our licence, we must have an EV. BYD is the top brand. I am looking at one for 60,000 pounds – expensive but I will get a return over the long term.”

This year BYD has overtaken Tesla to become the best-selling EV in Britain, with more than 26,396 sold in the first four months, including fully electric and plug-in hybrids. That was a growth of 124 per cent over the same 2025 period and a 9.5 per cent share of the UK market.

In the European Union, in the first five months of this year, BYD sold 135,307 vehicles, up 140 per cent year- on-year, overtaking Tesla to become number one.

BYD is leading a flood of China goods into Europe. In the first quarter, China’s trade surplus with the EU reached a record 98 billion euros. The EU accounts for 31 per cent of China’s total global surplus in goods.

EU leaders say this is unacceptable. In June, the European People’s Party, a centre-right group that is the EU’s largest, said it would “not accept China’s unfair market intervention” and called on the Commission to upgrade its “existing trade defence tools”.

German Chancellor Friedrich Merz, Ursula von der Leyen and 10 other leaders signed a statement that demanded the EU “stop naivety towards the long-term ambitions of China”. Five EU countries called for new tools that would raise tariffs and quotas and oblige companies to find alternative sources of critical inputs.

But Beijing does not want to listen.

In an editorial on June 22, the official Global Times and that China would not accept using exchange rates as a pretext for oppression, nor would it return to the old era of great power co-ordinating the face of a few countries.

“Today’s China is not the Japan of the past,” it said. “The scale of China’s economy, the depth of its market, the integrity of its industries and its policy autonomy are all on a different level.

“In the past, Europe occupied a high-end position in the global value chain, accustomed to treating technology, branding and rules as natural advantages. China’s development is unstoppable. Europe should not ask Europe to slow down. It should accelerate its own reform,” it said.

Wenxiang was a Manchu statesman and reformer who served as Chief Minister of the Qing dynasty during the 1860s. He told a visiting British official:

“You are all too anxious to awake us and start us on a new road, and you will do it. But you will all regret it. Once awaking and started, we should go far and fast – farther than you think and much further than you want.”

In September 1901, Sir Robert Hart, director-general of the Imperial Chinese Maritime Customs from 1863-1911, said the same thing, in a letter to his secretary in London:

“Opening of the East has increased consumption, but the East so far has not competed. Wait a score of years and you will have China laying down in Europe all sorts of things and selling for a shilling for a profit what it costs Europe half-a-crown to produce.”

The Global Times’ editorial was headlined: “the World does not need a new ‘Plaza Accord’”. This refers to an accord at the Plaza Hotel in New York in September 1985. It led to a dramatic revaluation of the Japanese yen to 128 to the dollar by 1988 from 242 at the time of the accord.

Chinese – and many Japanese – regard this as an attempt by the United States to prevent Japan from replacing it as the world’s dominant economic power. It has been a spectacular success.

After being one of the world’s fastest growing economies for 30 years. Japan’s GDP growth fell to an average 1.1 per cent a year after 1990. It was never able to challenge the U.S.

China sees Western demands to revalue the renminbi – to reduce its giant trade surplus – in the same light, as a political as well as economic weapon.

It sees its invasion of the European market as a fulfilment of Chief Minister Wenxiang’s prophecy.

Mark O'Neill

A Hong Kong-based writer, teacher and speaker.