10 February 2026 – Alarmism from Paris instead of reforms for Europe: a new report from France invokes the “China threat” and proposes measures that would come at a high cost – of all people – to Europe’s small and medium-sized enterprises (SMEs).
- France Again? How Paris Is Taking Europe's SMEs Hostage for Its Industrial Policy
- China Once Again as the Convenient Bogeyman
- Germany as a "High-Risk Case" – A Political Narrative
- The framing is unmistakable: "If Germany falls, Europe falls."
- Two French "Shock Options" – Both Highly Problematic
- European Double Standards and French Statism
- Who Pays the Bill? The SMEs Again
- A Crisis of Trust Instead of a Reform Agenda
- No One Ever Became Strong Without Competition
France Again? How Paris Is Taking Europe’s SMEs Hostage for Its Industrial Policy
France again?! That was our reaction too when the report by the Haut-Commissariat à la Stratégie et au Plan appeared under the martial title “L’industrie européenne face au rouleau compresseur chinois” (“European industry facing the Chinese steamroller”).
Read also on this topic:
- “Buy European” Proposal Meets Little Enthusiasm Across the EU
- “Made in Europe” – The Me-Too Strategy of a Very Special Frenchman
- Are You Asking the Right Questions? How France Is Negatively Shaping EU Policy
What presents itself as a sober analysis quickly reveals itself, upon closer reading, as a political appeal with a very clear agenda – and as yet another attempt to divert attention from France’s own structural problems.
European SMEs would be well advised to take a closer look. Much of what is being sold here as the “rescue of Europe” would, in practice, primarily burden the entrepreneurial middle class.
China Once Again as the Convenient Bogeyman
The core argument of the report is quickly summarized: China is allegedly able to manufacture products of comparable quality at prices 30-40% lower than European suppliers. This cost gap is described as structural and permanent, attributed to subsidies, economies of scale, integrated value chains, an allegedly undervalued renminbi, and regulatory asymmetries.
The authors’ conclusion is strikingly blunt: innovation, quality, productivity gains – none of this is supposedly enough anymore. Europe’s industry, they argue, can no longer compete on its own.
For SMEs, this diagnosis is deeply problematic. It defines competitiveness purely as an external issue -China – while completely ignoring Europe’s own homework: energy prices, permitting delays, fragmented markets, financing costs, and bureaucracy. China once again serves as a convenient all-purpose excuse for political inaction in Europe.
Germany as a “High-Risk Case” – A Political Narrative
Equally striking is how strongly the report emphasizes the alleged vulnerability of Germany and Italy. Germany in particular is recast from a pillar of stability into a systemic risk: job losses, export risks, entire industries under threat.
The framing is unmistakable: “If Germany falls, Europe falls.”
This is less analysis than strategic dramatization – with a clear objective. By placing Germany at the center of the threat narrative, political pressure is increased to abandon European taboos on subsidies, fiscal rules, and trade policy.
One can only hope that Germany’s Federal Minister for Economic Affairs, Katherina Reiche, recognizes this French maneuver early on. Reiche, and by extension the German government, must not allow themselves to be drawn into a centralized, French-style approach. After all, China remains one of Germany’s most important export partners, with annual trade volumes of around EUR 90 billion.
Two French “Shock Options” – Both Highly Problematic
The political demands of the report are drastic. Either:
- A blanket 30% general tariff on Chinese imports, or
- A targeted devaluation of the euro by 20-30% against the renminbi.
Both would constitute massive interventions with severe side effects.
A general tariff would not primarily hurt Chinese suppliers, but European SMEs dependent on imported inputs: machinery, electronics, chemicals, components. Large corporations can absorb or pass on such costs – SMEs cannot. For them, a general tariff would amount to one thing above all: a hidden cost tax.
A euro devaluation, meanwhile, would put political pressure on the independence of the European Central Bank and generate imported inflation – on energy, raw materials, and intermediate goods. Once again, export advantages would mainly accrue to large, globally active corporations, while the Mittelstand bears the higher costs.
European Double Standards and French Statism
The moral imbalance is particularly striking. When others – such as the United States – resort to tariffs or currency instruments, Europe is quick to label this rule-breaking and problematic. When France proposes similar measures, they are suddenly framed as a “necessary emergency mode.”
This points to a deeper issue: France continues to cling to a centralised, statist model of industrial policy that has failed to deliver tangible results for years. Instead of accelerating reforms, simplifying permitting, or improving cost structures, European power politics are now supposed to cover up domestic shortcomings.
In short: France’s failed industrial-policy DNA is being sold as European common sense.
Who Pays the Bill? The SMEs Again
For Europe’s SMEs, this agenda is dangerous. General tariffs, currency experiments, and large-scale subsidy programs favor actors with market power, lobbying access, and financial strength. The Mittelstand needs something else entirely: planning certainty, affordable energy, fast procedures, and reliable rules.
Symbolic politics against China solves none of these problems.
A Crisis of Trust Instead of a Reform Agenda
That such papers are being produced is no coincidence. Trust in political decision-making is eroding. The latest Munich Security Report highlights growing skepticism among Europe’s population toward its political elites. In France in particular, confidence in government policy is strikingly low – only a small minority still expects genuine improvement.
Perhaps this is the real core of the issue: where the will for reform is lacking, alarmism replaces policy.
No One Ever Became Strong Without Competition
China is a competitor – no question about that. But this French report exploits that reality to legitimize old industrial-policy reflexes. For small and medium-sized enterprises, the price would be high: higher costs, greater uncertainty, less competition.
Europe’s SMEs do not need French shock options. They need fundamental reforms. And even if reforms sometimes hurt, at least you don’t then have to hide them behind a fashionable pair of sunglasses.
Latest news
- “Buy European” Proposal Meets Little Enthusiasm Across the EU
- EU Steel Producers Earnings Reports Raise Eyebrows
- “Made in Europe” – The Me-Too Strategy of a Very Special Frenchman
We at the Gerber Group have been trading in stainless steel worldwide for over 20 years. We are your experts when it comes to purchasing, import, logistics and services. Information is a vital part of this. Because only then can you and we make the right decisions. Do you have any questions? Contact us now.
Disclaimer: Many things here represent our opinion. Others are information from the Internet. We can therefore never claim to be correct or complete. And never base a business decision solely on the news you receive from us.
