The trade war between the European Union and China is taking an unexpected turn. While the first sanctions fall on sectors as strategic as electric vehicles or spirits, a new player is entering the turmoil: European luxury. This economic bastion, which symbolizes both the creativity and prosperity of Europe, today finds itself at the heart of speculation about possible Chinese retaliations. But behind this apparent storm, a more subtle balance emerges. Experts, aware of the colossal economic challenges for China itself, are wondering: will Beijing really take the risk of slowing down one of the drivers of its domestic consumption? In this article, we will first analyze the immediate consequences of this crisis on the European luxury financial markets. Then, we will dive into the long-term outlook and scenarios that could shape the relationship between these two economic giants.
Luxury values weakened by commercial uncertainty
Last Tuesday, the European luxury sector suffered a significant setback on the stock market, marked by a fall in the largest houses, such as LVMH (-3.57%) and Kering (-4.45%). This panic among investors follows the announcement of China's new protectionist measures targeting European spirits.
Amid growing trade tensions between Brussels and Beijing, fears that luxury items would become the next target for Chinese retaliation immediately weighed on stock prices, leading to notable volatility across the market. The big brands, emblems of European economic power, thus find themselves at the center of speculation while the conflict extends to different strategic sectors.
This market reaction comes after a series of measures taken by the European Union against Chinese electric vehicles, accused of benefiting from illegal subsidies. In response, Beijing quickly retaliated by targeting imports of European spirits, casting a damper on investors' forecasts. Analysts now fear an escalation which could affect the luxury sector, which is essential for Chinese domestic growth. An attack on this segment would risk not only destabilizing the European economy, but also harming the strategic interests of China itself.
Luxury, a strategic sector that China could spare
Despite investors' concerns, many experts believe that targeting the luxury sector would go against Beijing's economic interests. Jacques Roizen, from the Digital Luxury Group, underlines that China has everything to gain from maintaining a favorable environment for luxury brands, which represent an important source of tax revenue and contribute to the development of domestic consumption.
Hainan province, for example, has become a hub for duty-free sales of luxury goods, evidence that Chinese authorities are seeking to keep consumer spending domestic. Imposing protectionist measures on this sector would encourage Chinese consumers to shop abroad, a scenario that Beijing seeks to avoid at all costs.
Furthermore, the size and importance of China's luxury industry makes it less vulnerable to accusations of dumping, unlike electric vehicles, where state subsidies are easier to demonstrate. As Jelena Sokolova, an analyst at Morningstar, points out, it is difficult to justify dumping practices on goods as exclusive as luxury handbags or watches, whose prices are largely determined by brand image and quality. scarcity of products. In addition, recent statements from Beijing and Brussels show a desire on both sides to maintain dialogue, hinting at the possibility of compromise to avoid an escalation that would harm their common economic interests.
If European luxury remains spared for the moment by Chinese protectionist measures, the sector remains under pressure due to market volatility and geopolitical tensions. However, analysts point out that Beijing has little interest in engaging in an economic battle in this area, given the importance of luxury brands to the Chinese economy. The ongoing negotiations between the European Union and China will be decisive for the future of the conflict, but for now it seems that luxury could continue to evolve on the fringes of trade retaliation.
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