Europe faces the toughest spot in the new global labour split
The article argues that Europe lags behind the US and China in the emerging global division of labour, lacking savings, energy resources and AI leadership.
The piece compares the three largest continental economies, highlighting the US’s dominance in software, high-tech and hydrocarbons, boosted by AI and shale energy, but hampered by a low savings rate that squeezes manufacturing. China mirrors the US in savings strength, now shifting from low-cost goods to high-tech production, supported by massive capital accumulation and a surge in engineering graduates, though domestic demand is weakening after a real-estate slump.
Europe, by contrast, has a small savings surplus, limited energy independence and no leading AI firms, making its traditional mid-tech sectors vulnerable to Chinese competition. Recent EU protectionist measures in steel and electric-vehicle imports have proved ineffective. The author recommends Europe focus on specialised, low-scale products such as ASML’s EUV lithography machines and aircraft, linking any subsidies to genuine adjustment efforts.
Why it matters
Europe's economic strategy must adapt to stay competitive in a world reshaped by US and Chinese growth.
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