The European economy, according to economic analysts and experts, is trapped between the world’s two largest economies and is unable to finance its own industries that are critical for the future. Europe is being overwhelmed by Chinese industry and American technology and is accelerating its economic decline by exporting its savings. The core of the problem lies in the huge stock of private and institutional EU capital in Europe that is not invested in the internal market. Even European private fund managers usually invest their money in conservative assets, such as real estate, and when they want to take on more risk, they place it in American technologies, instead of supporting companies that innovate in Europe.
The consequences are, therefore, not in the future, but are happening now, with Europe turning into a “dual economic colony”, on the one hand, an industrial colony of China and, on the other, a digital colony of the US. Venture capital-backed companies in the US raised almost four times more capital than their European counterparts in the first half of 2025, according to data from Pitch Book. Europe urgently needs private capital to finance the technology that is its future. European investors should finance high-risk, high-growth businesses to ensure future dominance. If they do not change their mindset, they will continue to invest in tourism, real estate, and technology, with investors’ money eventually returning to the US.
Compared to Europe, the global economy is performing better than expected, compared to the estimates made by OECD analysts a few months ago. However, according to the revised forecasts, the new report emphasizes that the full impact of the tariffs has not yet been seen, as it is currently offset by fiscal support covering the economic slowdown in China. In particular, the OECD notes that the effects of the tariffs are still being revealed and that exporting companies are absorbing much of them with smaller profit margins. Also, many well-managed companies accumulated high levels of inventory before the tariff increase, as confirmed by the large increase in imports of goods into the United States by the end of August, before exports from China to the United States plunged by 33% in late August.
The resilience of the global economy so far has led the OECD to raise its forecast for this year to 3.3% growth from 3.2% last year, after expecting 2.9%. However, it left its 2026 forecast unchanged at 2.9%, saying that the boost from high inventories built up ahead of tariffs is already running out and starting to weigh on investment and trade growth. On the other hand, the US economy is expected to slow to 1.8% in 2025 and 1.6% in 2026 from 2.8% last year, while in China growth is expected to slow in the second half of the year before returning to high levels and to 4.4% in 2026, while growth of 4.3% in 2025 and 4.7% in 2026 was expected. At the same time, however, China is trying to compensate for losses from sales in the US, attempting, as the data shows, to diversify its export orientation towards Europe.
Europe needs private capital to finance the technology that is its future. European investors should finance high-risk, high-growth businesses to ensure future dominance. If they do not change their mindset, they will continue to invest in tourism, real estate, and technology, with investors’ money eventually returning to the US
In the Eurozone, trade and geopolitical tensions appear to be a drag on the economy, despite the ECB’s interest rate cut. According to OECD forecasts, the economy of the 27 member countries is expected to grow by 1.2% this year, compared to a previous forecast of 1%. For 2026, a rate of 1% is estimated, compared to a forecast of 1.2% in the summer report. The changes are being introduced gradually in the EU, while some European companies, in order not to lose the American market, are absorbing the tariffs and accepting, for the time being, lower profit margins. Accordingly, China, armed with the high competitiveness of its businesses, its cheap currency compared to the expensive euro, and strong state support, has begun an export boom to flood Europe with cheap Chinese products.
The EU is increasingly dependent on the US and China, at the same time, for seven different reasons. The first main reason is the energy dependence on the US after the cut-off from Russian natural gas, which gives the US an energy, geopolitical, and technological influence. Europe turned to American LNG, American investments in energy, defense industry, infrastructure and strategic security contracts through NATO. The second reason is the American influence on defense and fintech data. Europe does not have its own independent technological or financial pillar with Big Tech, Google, Microsoft, and Meta controlling a large part of the European digital economy, while banking infrastructure and financial markets remain under central American control.
The third reason is the industrial dependence on China, as China is the main supplier of European industry, which has critical deficits in raw materials, rare earths, batteries, electric vehicles, cheap processing of products, components, and machinery. The fourth reason is the Chinese control of trade and logistics hubs in at least 15 major European ports and about 90 freight hubs with Chinese participation. Chinese companies have a stake in energy, infrastructure, data centers, and logistics, while European companies have transferred production to China or are dependent on Chinese factories. The fifth main reason is the weakness of a European strategic autonomy, since the EU has never completed a unified industrial strategy, did not react immediately to the energy crisis, has not yet protected itself from the US and China, did not invest in defense, technology, infrastructure and raw materials promptly, while it is unable to decide quickly due to the 27 member states. The sixth reason is the dumping of cheap costs by the US and China, resulting in deindustrialization and dependence on external producers. The US attracts European industries with low energy costs, and China exports low-cost products to Europe, putting pressure on production. Finally, the seventh reason is the demographic and investment lag, with an aging population and a shrinking workforce, as well as low investment in R&D and digital transition.
Everything suggests that the impact of the wrong European choices and the effects on the economies of European countries will not be long in coming. The EU must hurry to make corrective moves to restore the internal balance of supply and demand, as well as the trade balance of imports and exports. The term “dual economic colony” for Europe captures the reality that the EU is increasingly “dual-dependent” on both the US and China. In the US for security, energy, finance and technology and in China for industry, raw materials, supply chain and market. This development is not the result of a momentary choice, but a combination of geopolitical, energy, technological and industrial weaknesses. This is because the EU failed to formulate a self-reliant power strategy, delayed in shielding its production and did not invest in unified industrial, defense and energy autonomy. To be honest, I don’t believe that Europe has no longer the time and the way to correct its own mistakes.
This opinion article has been written by Mr. Vassilis Korkidis, President of ASCAME’s member, the Piraeus Chamber of Commerce and Industry.