From August 14 to 15, 2026, Mr. Zuo Wenxing, Chargé d'Affaires a.i. of the Embassy of China in the Czech Republic, published a signed article titled “The So-Called ‘China Shock 2.0’ Is Actually ‘China Opportunity 2.0’” in Czech media outlets Naše Pravda (Our Truth), Parlamentni Listy, and 24 hodin (24-Hour News Network). The article refutes the erroneous narrative of “China Shock 2.0” and urges European countries, including the Czech Republic, to embrace the opportunities presented by “China Opportunity 2.0” and to jointly embark on a path of mutually beneficial development and shared prosperity. The full text of the article is as follows:
Recently, some politicians and media in Europe have been exaggerating the narrative of a so-called “China Shock 2.0,” claiming that China is gaining “unfair competitive advantages” in fields such as new energy and high-end manufacturing through “product dumping,” “industrial subsidies,” and “currency manipulation.” They are agitating for the introduction of trade restriction measures against China. Such arguments blatantly disregard the enormous opportunities that China’s economic growth has created for the world and are, in essence, politically motivated rhetoric aimed at misleading the public.
The claim of “product dumping” selectively interprets trade data and fabricates justifications for trade protectionism. According to the WTO Anti-Dumping Agreement, dumping only occurs when export prices are lower than domestic prices in the exporting country. However, mainstream Chinese car models like BYD, Geely, and Denza are sold in Europe at 1.5 to 3 times their domestic prices. Similarly, photovoltaic modules and energy storage batteries have higher end-user prices in Europe than in China. In 2025, the capacity utilization rate of China’s manufacturing sector stood at 74.6%, and in the first half of this year, it was 73.7%, which falls within the internationally recognized range for manufacturing capacity utilization (73%-78%), indicating that there is no issue of widespread excess capacity. Additionally, exports accounted for only 15.7% of China’s total new energy vehicle production in 2025, demonstrating that domestic demand remains the primary driver of Chinese industrial capacity.
International trade should not be evaluated solely in terms of merchandise trade; service trade, profits of multinational corporations, and revenues from intermediate goods should also be considered. In service trade, the EU enjoys an absolute advantage over China, holding a trade surplus of $48.3 billion against China in 2025, accounting for 41.6% of China’s total services trade deficit. Each year, China pays the EU billions of dollars in fees for intellectual property, high-end services, and brand royalties. Additionally, 40% of the products made by EU companies in China are exported to Europe and other parts of the world. While China may record a trade surplus on paper, the majority of the profits from such trade flows back to Europe, creating a scenario in which China records the surplus, but Europe enjoys the profits. Furthermore, nearly half of China-EU trade involves industrial intermediate goods, with European companies benefiting from competitively priced Chinese components to significantly reduce production costs in sectors such as automotive, photovoltaics, and chemicals, thereby enabling the production of high-value-added end products and enhancing global competitiveness.
The “industrial subsidies” argument grossly mischaracterizes the concept of subsidies while ignoring the inherent competitiveness of Chinese industries. Some media outlets have recently cited data from an OECD report claiming that Chinese subsidies are three to eight times higher than those of other countries. However, this report lacks rigorous definitions, employs biased sample selection, and draws overly subjective conclusions. The so-called “subsidies” include various forms of government support, such as policy-based financial aid, tax incentives for research and development, and infrastructure construction in industrial parks—categories that deviate from the consensus frameworks set by the World Trade Organization (WTO).
The competitiveness of Chinese products is not “subsidy-driven.” Industrial subsidies in China are primarily focused on supporting technological research and early-stage market development, and they do not constitute the prohibited subsidies outlined by WTO rules. For example, China’s photovoltaic (PV) industry initially used subsidies to validate technological pathways, but since 2013, subsidy standards have been gradually reduced, and by 2021, central government subsidies for new PV projects were completely abolished. In competing on international markets, Chinese companies rely on leading-edge technologies, superior product quality, and comprehensive services rather than any so-called “subsidy advantages.” This summer, Chinese-made air conditioners, known for their low price, high quality, and ease of installation, were in short supply across the European market. In the first half of this year, China exported $3.76 billion worth of air conditioners to the EU, marking a 43% year-on-year increase. The competitiveness of Chinese products in the global market is clearly evident.
The claim of “currency manipulation” disregards the dynamics of foreign exchange markets and the fundamental realities of China’s economic development. As a responsible global power, China does not engage in competitive currency devaluation, nor does it use exchange rate policies to gain competitive advantages. The trajectory of the RMB exchange rate in 2025 fully reflects its market-driven characteristics, with fluctuations against the Euro and the US Dollar occurring in both directions. These variations are dynamically adjusted in line with international exchange rates, as well as market supply and demand, and there is no evidence of sustained one-sided depreciation or deliberate undervaluation. Assertions such as the RMB being “undervalued by 30%” are baseless and lack any credible calculation.
China has no motivation for keeping its currency undervalued in the long term. As the world’s leading exporter of goods, China is simultaneously the largest importer of energy, minerals, high-end equipment, and agricultural products. In the first half of this year, China’s import volume topped 10 trillion yuan for the first time in the same period, marking a year-on-year increase of 22.1%, far exceeding the 8.7% growth in exports. While a weaker RMB might temporarily enhance the price competitiveness of export goods, it would result in higher costs for imports of bulk commodities and critical components, pushing up production costs in manufacturing.
“China Shock 2.0” Is Actually “China Opportunity 2.0.” The underlying causes of Europe’s manufacturing stagnation and industrial decline are its own structural challenges. A report by Germany’s Kiel Institute for the World Economy (IFW) indicated that only about one-third of Germany’s lost global market share was attributable to competition from Chinese exports, while the remaining two-thirds stemmed from its own decline in competitiveness. The Economist recently argued that Europe should focus on addressing its internal structural issues to revitalize its industrial base, rather than attempting to block competitors. The reality is that China is not the root cause of Europe’s trade and economic challenges but rather a partner for resolving them. Many multinational enterprises have continued to increase their investment in China, shifting towards a development model that leverages China’s innovation ecosystem for synchronized global R&D and shared outcomes. For instance, BMW has established four R&D innovation hubs and three software companies in China, Mercedes-Benz has set up large-scale R&D centers in Beijing and Shanghai, and Philips has built five innovation companies and five manufacturing bases in China.
We urge European politicians and media to abandon outdated attitudes of confrontation and suspicion toward China and to recognize the immense benefits of China’s economic vitality and open markets for global development. China stands ready to work with European countries, including the Czech Republic, to align with “China Opportunity 2.0” and jointly chart a path of mutually beneficial cooperation and shared prosperity.