China’s Rise in Global Trade: Infrastructure, Influence, and Implications for Europe

The dynamics of global trade underwent significant changes from 2000 to 2024. The EU used to be the clear leader, but China eventually overtook it as the dominant force in the market.  China's overall trade volume surpassed that of the EU by 14% by 2024, with imports being about the same and exports being 28% larger. China's trade surplus was therefore 510% more than the EU’s. As a result, China expanded its influence in Asia, Africa, South America, and parts of Europe, becoming the largest trading partner for more than 120 countries.

However, trade is becoming a vehicle of geopolitical influence rather than only the transfer of products. Deeper ramifications can be found behind the figures, including the capacity to project power internationally, control over infrastructure like ports and digital networks, and access to vital raw commodities. Much of the globe, particularly the EU and Global South, are in more asymmetrical dependence due to China's dominance in the supply of industrial inputs and rare-earth elements.

This raises an important question: What does the rise of China promise for the future of international commerce, the strategic independence of Europe, and the balance between the military and the civilian sector in a world with more powers? In a world where economic links are inextricably linked to geopolitical influence, Europe must consider how to manage its own risks and potential as China reshapes global alliances and supply lines.

One recent example of this emerging multi-polar dynamic occurred in early September 2025, when Chinese President Xi Jinping hosted a massive military parade in Beijing to commemorate the 80th anniversary of the end of World War II. Standing alongside him on the Tiananmen Square rostrum were Russia’s Vladimir Putin and North Korea’s Kim Jong Un – the first time all three of these leaders, each a rival to Western power, have gathered together at such an event. Observers noted that this unprecedented display could signal a potential “three-way unity” against the United States, underscoring how China’s growing clout is now translating into strategic partnerships that challenge the U.S.-led global order.       

China’s Transformation: From Poverty to Power

Before its economic reforms in 1978, China was overwhelmingly agrarian: around three-quarters of its workforce was employed in agriculture, most rural communities relied on subsistence farming, and industrial production was stagnant. Collectivised farming under the People’s Communes dominated the countryside, limiting productivity and keeping rural incomes extremely low.

After China joined the World Trade Organisation in 2001, its profound structural changes intensified. This integration opened up access to global trade and finance, accelerating the growth of the private sector, which by 2005 already accounted for 70% of GDP. 

To advance into cutting-edge industries such as electric vehicles, robotics, aerospace, and semiconductors, through subsidies, tax breaks, technology mandates, and state investment funds, the government simultaneously launched an aggressive industrial policy, which was eventually consolidated under programs such as Made in China 2025.

Demand for rare earths, steel, copper, lithium, and cobalt caused an unprecedented commodity supercycle in China as a result of its rapid industrialisation and urbanisation. China's purchasing power transformed global markets in the early 2000s and mid-2010s, securing supply chains across Africa, Latin America, and Central Asia, while driving up commodity prices. China has also gained dominant capacity in the processing industry, processing approximately 99% of rare earths entering the EU, 92% of graphite, and 90% of refined rare earths worldwide.

The early boom in China was driven by investment-based development, with large domestic reserves being directed toward manufacturing, real estate, and infrastructure through coordinated government policy and subsidised loans. In addition to supporting export-oriented industries, significant investments in ports, railways, energy corridors, and industrial parks created dual-use infrastructure that provided strategic mobility across Asia and beyond, military logistics, and civilian transportation.

The Belt and Road Initiative: Strategic Infrastructure as Foreign Policy

In the first half of 2025 alone, Chinese companies signed new agreements under the Belt and Road Initiative worth more than $124 billion, exceeding the total for the entire year. Africa and Central Asia are the main beneficiaries of these mega-projects, which include mining, oil, gas, and renewable energy projects. In particular, a record $25 billion was spent on mining and metals, and $20 billion was allocated to processing plants in Nigeria.

As Western economies raise tariffs and restrict market access, China began to strengthen its infrastructure diplomacy and supply chain integration efforts in the Global South in the 2010s, known as the Belt and Road Initiative. 

Increasingly, deals under this project are direct foreign investments rather than sovereign loans, helping China avoid the “debt trap” while securing long-term economic and political influence. Unlike the US, which is retreating behind trade barriers, China offers capital, connections, and market access — albeit on terms that strengthen its strategic influence over energy, logistics, and raw material flows.

Beijing has also been leveraging international forums to promote its vision of global economic leadership. At a major Shanghai Cooperation Organisation summit in 2025, Chinese President Xi Jinping made veiled swipes at Washington’s “bullying practices,” declaring that “the house rules of a few countries should not be imposed on others” while casting China as a champion of a more just, multipolar world. He pledged roughly 2 billion yuan in grants and another 10 billion yuan in loans to SCO member states, urging them to leverage their “mega-sized markets” and pursue integration over decoupling. By positioning China and its partners as an alternative bloc to the U.S.-led system, Xi’s message reinforced the notion that global trade and governance should be shaped on Beijing’s terms – a strategic reality that Europe must now navigate.

The BRI has changed from funding large-scale projects to supporting more extensive, market-driven business growth.  Chinese businesses are now making a strong impact in the Global South because of government subsidies and infrastructure developed by the Belt and Road Initiative. They are constructing factories in Morocco and Malaysia, controlling the market for mobile phones in Africa, and outpacing the market for EVs and medical equipment in Latin America. This also includes projects with clear dual-use potential: for instance, commercial ports such as Gwadar in Pakistan could be repurposed for naval refuelling, resupply operations, or even intelligence gathering, blurring the line between civilian and military utility. 

This new stage reflects a deeper economic logic: Chinese companies are entering the market with customised goods and quick scalability as Western multinational corporations retreat or are protected by trade restrictions. The Digital Silk Road is becoming an increasingly critical component of the BRI, with Chinese-built telecommunications networks, satellite systems, and data centres shaping information flows in partner countries. These projects have direct implications for data control, cybersecurity, and surveillance — reinforcing China’s civil-military integration strategy and expanding its influence into the digital domain.

Case Study – Kenya and Africa’s Deepening Ties with China

In addition to megaprojects and debt diplomacy, China now has a significant economic influence on trade and consumer habits across Africa. This is evidenced by the popularity of establishments such as Kampala, China Mall in Uganda, which sell inexpensive Chinese goods. African consumers benefit from affordability and convenience, but basic trade patterns reveal a growing asymmetry: in 2024, China exported $179 billion worth of goods to Africa, while importing only $117 billion worth, mainly raw materials such as minerals and oil from countries such as South Africa, Angola, and Congo, as well as copper and cobalt transported through East African ports. Except for exports from Eswatini, Beijing has announced a zero-tariff policy for almost all African goods; however, the structural trade deficit is still largely ignored.

The main beneficiaries of this trade structure are Chinese state-owned enterprises and companies with political connections, which provide long-term access to strategic resources, guaranteeing Beijing's influence over critical supply chains for decades to come. In extreme cases, inability to service Chinese loans has led to significant concessions, such as Kenya reportedly relinquishing operational control over parts of its port infrastructure after struggling to repay debts tied to the Standard Gauge Railway project. China is overtaking the US, whose power is waning due to protectionist policies and diplomatic isolation, thanks to gestures of infrastructure assistance and market openness. Today, Washington is employing the same transactional, extractive diplomacy in its competition with Beijing, despite decades of Western complaints that China is exploiting Africa for its resources. Moreover, China's expanding influence is not limited to ports and logistics hubs — smart city projects, AI-based surveillance systems, and facial recognition technology provided by Chinese companies are being implemented in African capitals.

Even while the Belt and Road Initiative has brought infrastructure and investment to Africa, many Chinese companies continue to rely heavily on imported labour and maintain strict supply chain control. Benefits to host nations continue to be unequal. This reflects a trend seen throughout the Global South: governments from Brazil to Indonesia are having difficulty enforcing labour and environmental laws, ensuring Chinese companies localise manufacturing, and sharing technology. 

What China’s Dominance Means for Europe

Europe faces a twin dependence dilemma: U.S. protectionism is closing markets while Chinese competitiveness floods the EU with subsidised goods, especially in solar, wind, and electric vehicles. This economic reliance is now a geopolitical tool for Beijing, revealed by a $350 billion EU-China trade gap in 2023 and China’s retaliatory limits on rare earth exports after EU tariffs. These minerals—used in everything from EV motors and wind turbines to fighter jets—are 99% supplied to the EU by China, which processes over 92% of global output. China also controls over 75% of global battery cell production and more than 80% of key solar panel components, making Europe’s clean energy transition heavily dependent on Beijing. 

This unequal dependency is made worse by China's illicit politics. It opposes Western attempts to regulate the Kremlin, fortifies ties with Russia, and courts some EU countries, including Germany and France, without going via Brussels. By portraying Europe as a fractured market that is readily exploited, Beijing's divide-and-conquer policy weakens EU solidarity. Beyond ports, integrated sensors in Chinese-built cranes in key European harbours are causing security worries since they may gather information on cargo flows, shipping patterns, and even military logistical activities. 

In 2019, Italy boldly became the first G7 country to join the Belt and Road Initiative (BRI), strategically seeking infrastructure investment and enhanced export access to China. While Rome secured immediate trade benefits and vital port development opportunities, this decision has undeniably strained relationships with NATO allies and EU partners who remain wary of Beijing's expanding influence over key infrastructure. Italian policymakers are now compelled to reevaluate their stance, rigorously weighing the economic advantages against significant security risks. The debate over whether to renew BRI agreements or shift towards a robust transatlantic alignment is intensifying. 

Decades of strategic preparation have given China its leverage. The nation has successfully monopolised supply chains for raw materials, accomplished vertical integration in processing, and carefully given a few corporations "green channel" access. This extends to establishing "standards power" in crucial sectors such as telecommunications, artificial intelligence, quantum computing, and surveillance technologies, ensuring governance models that reinforce state control. In the Global South, Chinese firms are on track to eclipse European multinationals by 2030, directly threatening the EU's economic influence and soft power. The message to Europe is unequivocal: without control over essential resources, technologies, and standards, its geopolitical independence will continue to erode.

Strategic Responses for Europe

As the trade war between the US and China escalates, regionalism is reshaping global trade into new, unaligned blocs, with Europe at the centre. Investors are already betting on European supply chains as a geopolitical hedge, and the revival of the defence and telecommunications industries underscores the strategic potential of EU internal integration. However, this opportunity requires thoughtful action: to secure its place, Europe must expand its strategic industries, vet foreign investments, and strengthen the autonomy of its supply chains through friendly outsourcing and bilateral cooperation. 

Here comes quite an intriguing dilemma: the European economy is heavily dependent on international trade, but the global trading environment is becoming increasingly hostile and politicised. As the only major bloc that still openly supports multilateral trade, the EU must balance opposing pressures from the US and China. With trade accounting for nearly 29% of EU GDP, any disruption — whether Trump-era tariffs or a flood of Chinese exports redirected from the US — would deal a serious blow to European industry. Calls for strategic autonomy, once championed mainly by France, are now gaining wider traction as politicians realise that trade is no longer purely an economic issue — it has geopolitical significance. The emergence of green conditions, such as the carbon border adjustment mechanism and bilateral agreements with middle powers such as Mexico,

Malaysia, and MERCOSUR, reflects a shift in Europe's strategy: not toward complete isolation, but toward a more sustainable, value-oriented, and diversified trade architecture. Europe may not be able to withdraw from the global market, but it can revise the terms of cooperation.

To move from fragmented initiatives to a coherent strategy, the EU must consider supply chain security, industrial competitiveness, and geopolitical resilience as interlinked components of a single policy framework. This requires setting binding targets, coordinated funding, and the integration of trade, industrial, and security policies into a single strategic concept that will ensure that measures such as the Critical Raw Materials Act are not isolated initiatives, but become part of a long-term plan to reduce dependence on strategic competitors and deepen partnerships with reliable allies.

Policy instruments and strategic measures

• Accelerate the implementation of the EU Critical Raw Materials Act by supporting strategic projects for the extraction, processing, and recycling of raw materials both within and outside the EU through simplified permitting mechanisms and dedicated funding — aligning internal supply targets (10% extraction, 40% processing, 25% recycling by 2030) with diversification targets (limiting dependence on any single source outside the EU to 65%). 

• Use strategic projects in third countries (with a total value of €5.5 billion for 13 projects) to ensure access to lithium, cobalt, rare earths, and other critical resources, while ensuring compliance with environmental, social, and governance standards in partner regions.

• Support for new European supply ecosystems, such as French initiatives to recycle rare earth elements within the CRMA, which restore local sustainability and industrial potential.

• Strengthen efforts to include economically important but underutilised materials, such as magnesite, in the CRMA strategic list to strengthen the broader industrial base needed for clean technologies and heavy engineering.

• Encourage green supply initiatives, including efforts to extract materials such as gallium in Greece, to diversify supply and strengthen EU sovereignty over new critical minerals.

• Consider additional economic instruments — temporary tariffs, tax breaks, and targeted subsidies — to protect new European suppliers from undermining their competitiveness while strengthening strategic autonomy, as European industrialists warn. 

Conclusion

China's domination in raw commodities, control over vital infrastructure, and growth in influence throughout Asia, Africa, Latin America, and even portions of Europe have propelled the country's transition from an agricultural economy to the world's leading trading powerhouse. Commercial ports may function as naval bases, digital networks can be used for both trade and surveillance, and rare-earth supply chains can be used as political leverage. This rise is not only economic; it also incorporates a civil-military duality. 

For Europe, this reality demands a coordinated and strategic response. It would be impractical and unwise to completely decouple from China; instead, the objective should be to increase self-sufficiency in vital areas, diversify alliances with reliable friends, and make sure that no one nation has undue influence over the vital components of the European economy. This requires integrating trade, industrial, and security policy to protect key technologies, secure alternative raw material sources, and insulate supply chains from coercion.

The new global map makes one truth unavoidable: trade is power, infrastructure is leverage, and raw materials are the foundation of sovereignty. Europe must act with both economic pragmatism and strategic foresight—ensuring that while it remains engaged with China, it never finds itself with too many eggs in one basket.