Rising Chinese capital goods export share increases competitive pressure on European capital goods
AI summary card
Rising Chinese capital goods export share increases competitive pressure on European capital goods
Goldman Sachs’ tracking of Chinese imports and exports across 43 capital goods categories indicates that China’s export momentum, share of exports to Europe, and patent-filing advantages are strengthening, while European capital goods companies face more pronounced medium- to long-term competition and trade friction risks.
- Europe still accounts for 43% of global exports in the tracked capital goods categories, but its share has fallen from 54% in 2005; China’s share has risen from 7% in 2005 to 24% in 2025.
- In June 2026, China’s overall export growth accelerated to 27% yoy, up from 19.4% in May; export growth to the EU rose to 18.5% yoy, while imports from the EU also rebounded to 9.2% yoy.
- Across the 43 tracked categories, China’s aggregate export value growth on a rolling three-month basis rose to 15.4% yoy in June, while import value growth rose to 13.4% yoy.
- The strongest L3M export growth categories included tungsten powder and tools, fiber optic cables, marine engines, heat pumps, and LCV; the categories with the sharpest import declines included cranes, heat pumps, coffee machines, bathroom fixtures, and air pumps.
- China surpassed Europe in capital goods patent filings in 2025, especially leading in patents related to electrical machinery, equipment, and energy.
Report interpretation
Overview
This report is Goldman Sachs’ China import/export tracker for the European capital goods industry, covering 43 product categories relevant to European capital goods companies. Using data from China Customs and the International Trade Centre, the report examines China’s export momentum, changes in import dependence, trade balance, patent filings, and EU trade defense measures across global, European, and U.S. markets. The core conclusion is that China’s capital goods export capabilities and global share continue to strengthen. While Europe still retains a relatively high export share, its relative advantage is narrowing, and some exporters of mid- to high-value capital goods are facing pressure from domestic substitution in China and competition in international markets.
Core views
The report argues that China’s improving competitiveness in capital goods is not a one-off short-term fluctuation, but is jointly reflected in expanding export share, slowing imports, improving trade balances, and leading patent filings. Over the past decade, China’s capital goods exports to Europe have grown faster than to other regions, and in categories such as LED lighting, excavators, heat pumps, HDT, tractors, and copper wire, export growth and import deceleration have occurred simultaneously, indicating stronger domestic substitution and external competition. Europe still retains advantages in commercial vehicle engines, dairy machinery, and rail brakes, but these are also among the areas where China has been catching up the fastest over the past five years. The rise in EU trade defense investigations reflects a policy response to competitive pressure from China.
Analysis framework
The report uses a monthly trade data tracking framework to monitor the U.S. dollar value of China’s imports and exports across 43 capital goods categories at the 6- to 8-digit HS code level since 2015, broken down by global markets (excluding Russia), Europe, the United States, and other regions. The analysis also compares long-term trends, recent three-month year-over-year changes, changes in trade balances from LTM and FY15, shifts in Europe’s and China’s global export shares, the patent filing landscape since 2025, and EU trade defense investigations from 2020 to 2026.
Methodology notes
Track China’s imports, exports, and regional export changes by product category
The report uses data from China Customs and the International Trade Centre to examine changes in China’s export growth, import deceleration, and trade balances across 43 capital goods categories, at the 6- to 8-digit HS code level, using monthly U.S. dollar values and rolling three-month year-over-year metrics.
Measure domestic substitution and external competition through China’s export expansion and declining import dependence
The report compares the growth in China’s export values with the slowdown in import values within the same framework to identify improvements in China’s capital goods capabilities, import substitution, and competitive pressure on European companies.
Use capital goods-related patent filings in China, Europe, and the United States to measure technology competition trends
The report adds a patent competition landscape, noting that China surpassed Europe in 2025 to become the leader in capital goods patent filings, with particularly strong performance in electrical machinery, equipment, and energy-related fields.
Asset mapping & comparison
Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).
- Atlas CopcoExposure related to air pumps, centrifugal pumps, compressors, and vacuum pumps
- Strengths
- Europe still maintains strong technological and brand advantages in some industrial equipment.
- Weaknesses
- Air pump imports declined year over year, while compressors and other pump categories are under monitoring pressure from Chinese exports and domestic substitution.
- Comparison
- China’s rising export share is eroding Europe’s traditional advantages, though differentiation may still exist in high-end products.
- Risks
- Improving local supply capability in China, price competition, and changes in European trade policy.
- Prysmian, Nexans, NKTExposure related to aluminum wire, copper wire, electrical conductors, and fiber optic cables
- Strengths
- European cable companies still hold industrial positioning in electrification and high-end cable segments.
- Weaknesses
- Fiber optic cable is one of China’s strongest L3M export growth categories, with significant growth in exports to both Europe and the United States.
- Comparison
- China has a high global export share in categories such as low-voltage cables, compressors, and electrical equipment.
- Risks
- China’s export expansion, U.S. tariff disruptions, and EU anti-dumping or anti-subsidy investigations.
- ABB, Schneider Electric, Siemens, LegrandExposure related to switchgear, medium-voltage equipment, and electrical equipment
- Strengths
- European electrical equipment companies have a global customer base and high-end product capabilities.
- Weaknesses
- China has already moved clearly ahead of Europe in patent filings related to electrical machinery, equipment, and energy.
- Comparison
- In the U.S. market, China’s switchgear exports grew >>+100% yoy, showing stronger competitive momentum.
- Risks
- Catch-up in patents and product capabilities, price competition, and changes in trade barriers.
- SiemensLook-through exposure across rail transit, ultrasound scanning equipment, medium-voltage equipment, and other fields
- Strengths
- Has accumulated technological capabilities in rail, medical/industrial equipment, and electrical equipment.
- Weaknesses
- Ultrasound scanning equipment has stood out in the growth of China’s trade balance, and China’s export share to Europe is rising.
- Comparison
- Europe still leads in some high-end equipment, but China is catching up faster in export share and patents.
- Risks
- Import substitution in mid- to high-end products, shrinking European share, and policy-driven local preference.
- CNH, Volvo, Traton, DaimlerExposure related to excavators, loaders, HDT, LCV, commercial vehicle engines, and tractors
- Strengths
- European companies have clear historical advantages in commercial vehicles, construction machinery, and engines.
- Weaknesses
- LCV, loaders, HDT, cranes, and marine engines are categories where Europe has lost relatively more global export share versus China.
- Comparison
- China’s share in construction machinery and vehicle-related categories is rising quickly.
- Risks
- Competition from Chinese exports, domestic substitution, and uncertainty in U.S. and European trade policy.
Key data
- Europe’s global export share in capital goods43% (global export volume of tracked products in 2025)Down from 54% in 2005, indicating a decline in Europe’s relative share.
- China’s global export share in capital goods24% (2025)Up 16 percentage points from 7% in 2005.
- China’s overall export growth in June 2026+27% yoyHigher than +19.4% in May 2026, mainly driven by AI-related products and autos.
- China’s export growth to the EU in June 2026+18.5% yoyHigher than +7.6% in May 2026; at the same time, China’s import growth from the EU rose to +9.2%.
- Export growth across the 43 tracked categories+15.4% yoy (rolling three months, June 2026)Higher than +9.6% in May 2026.
- Import growth across the 43 tracked categories+13.4% yoy (rolling three months, June 2026)Slightly above +13.2% in May 2026.
- Fastest-growing China export categories in L3MTungsten powder and tools, fiber optic cables, marine engines, heat pumps, LCVTungsten powder and tools and fiber optic cables were both >>+100%, marine engines about +75%, and heat pumps and LCV about +60%.
- Categories with the most pronounced decline in China imports in L3MCranes, heat pumps, coffee machines, bathroom fixtures, air pumpsApproximately -51%, -37%, -36%, -34%, and -26%, respectively.
- EU trade defense investigations33 new cases in 2024Significantly above 12 in 2023 and the 10-year historical average of 14; final trade defense measures in force in 2025 may exceed 200.
- New product category addedCoffee machines (De’ Longhi)This product category was newly added in this edition of the tracker.
Impact & implications
For European capital goods companies, the report’s implications are cautiously negative: China is improving export capabilities across more product categories, reducing import dependence, and expanding exports to Europe, which may compress European companies’ share in emerging markets and in Europe’s domestic market. Companies with higher exposure to China and products vulnerable to domestic substitution face higher risk. At the same time, the increase in EU trade defense investigations may cushion part of the impact, but it also implies rising trade friction and regulatory uncertainty. Import and export values cannot be directly equated with technology levels; for example, China’s imports of industrial robots are mostly high-end six-axis robots, while its exports are mainly lower- to mid-end four- or five-axis robots, so interpretation needs to be combined with product mix and technology tier.
Risks
- China’s capital goods export share continues to rise, which may compress European companies’ market share globally and within Europe.
- China’s declining import dependence may imply a structural decline in demand for European sales into China.
- The increase in EU trade defense investigations and measures may provide policy protection, but may also raise trade friction and supply chain uncertainty.
- The U.S. tariff environment remains fluid, potentially distorting the regional export pace of China to the United States and Europe.
- Trade values do not fully represent technology tiers; ignoring differences between high-end and lower-/mid-end products could lead to misjudgment of competitive intensity.
- China’s manufacturing capacity utilization remains low; if export expansion is accompanied by price competition, European companies’ profit margins may come under pressure.
What to watch
- The rolling three-month year-over-year changes in exports and imports across the 43 capital goods categories.
- Changes in the share of China’s exports to Europe within China’s total exports, especially for fiber optic cables, industrial robots, rail, LCV, and ultrasound scanning equipment.
- Changes in the gap between China and Europe in global export share, especially in Europe’s stronghold areas such as commercial vehicle engines, dairy machinery, and rail brakes.
- Whether the high growth in tungsten powder and tools, fiber optic cables, marine engines, heat pumps, and LCV can be sustained.
- Whether import declines in categories such as cranes, heat pumps, coffee machines, bathroom fixtures, and air pumps indicate accelerating domestic substitution.
- The number of new EU anti-dumping, anti-subsidy, and anti-circumvention investigations, final measures, and applicable product categories.
- Whether China’s lead in capital goods patent filings relative to Europe and the United States continues to widen.