EU’s industrial base in fight for survival against Chinese threat 

Belgian citric acid plant a test case for bloc’s ability to compete

Financial Times UK

22 Jul 2026

PETER FOSTER JOE LEAHY

In the Flemish market town of Tienen in Belgium, Citribel’s fermentation vats have

produced citric acid for Europe’s food, pharmaceutical and cleaning industries

since 1929.

Nearly 8,000km away in China’s eastern province of Shandong, a cluster of newer

producers has helped turn the same commodity into a test of whether Europe can

still defend its basic industrial base.

Built with Belgian knowhow and Italian refinery expertise nearly a century ago, Citribel stands as a testament to European industrial ingenuit

But chief executive Joris Merckx says it faces an existential threat from subsidised

Chinese competition that has driven prices below levels European plants can sustain long term.

“It is a matter of our survival. We innovate on side-products, but we have been

making losses for the last three years. It is just a matter of time and we all disappear,” Merckx said.

Citribel’s plight is echoed across Europe’s bulk chemicals industry, which has seen a

rash of plant closures in recent years, raising questions about how it can survive in

the face of competition from Chinese rivals.

The chemicals industry is a textbook example of how Chinese companies have

come to dominate whole sectors through Beijing’s industrial policy and generous

subsidies.

The EU first imposed protective antidumping duties of up to 42 per cent on citr

acid in 2009, but they are much lower than the US rate of 156 per cent

Since the Covid pandemic and Russia’s full-scale Ukraine invasion, competition

from China had become unbearable, analysts said.

Sylvie Lemoine, deputy director-general of the European Chemical Industry Council

(Cefic), said Europe had been wrestling with a toxic combination of higher ener

prices, green taxes and soft demand at home — all at a time when Chinese production had surged.

“We are in a time of polycrisis,” she said, noting that European industry generally

suffered from a lack of competitiveness. “We need to address unfair practices with

China. Where trade is fair we should be open; where it is unfair, we have the right

to defend ourselves and we need to find this balance

Analysts at Barclays warned last year that the bulk chemicals industry was entering

a new paradigm where “nontraditional economic incentives are disrupting the historical cycle precedent”.

The origin of Citribel’s China challenge can be found in the city of Weifang in Shandong where China’s citric acid industry is concentrated. The growth of a cluster of

producers around the city illustrates how the country’s industrial policy can lead to

overcapacity and domination of global industries.

China’s output of citric acid rose from just over 1mn tonnes in 2012 to nearly 2.2mn

tonnes last year, according to industrial database Zhiyan Consulting, with almost 90

per cent of this produced by six companies, four of them from Shandong, including

industry leader Weifang Ensign Industry.

Weifang Ensign’s accounts reveal the importance of subsidies to its profits. It reported a 77 per cent plunge in net profit last year when several subsidies were withdrawn. Weifang Ensign did not respond to a request for comm

Although Beijing announced it was removing export tax breaks from 249 industrial

products in April, citric acid continues to benefit from a 13 per cent export t

rebate, encouraging producers to ship more to foreign markets.

“Even if they are not making enough money, still they believe it is a good opportunity for them to consolidate the market and to take more market share so that when

the market becomes better, they will make even more money,” said Ivy Sun, who

leads China chemicals research at consulting firm Roland Berge

The pressure on European industry has fuelled demands for tougher action against

Beijing’s policies, with record numbers of requests for the European Commission to

impose anti-dumping duties to protect the sector since 2023

Bart De Wever, Belgium’s prime minister, warned in March that China was evolving

“from partner and competitor to a systemic rival through state-driven overcapacity”.

In Tienen, the consequences of the trade battle with China can be seen in lower production and furloughed staff.

Merckx said the Citribel plant, one of only two remaining citric acid factories in

Europe, had been running at 60 per cent capacity, stockpiling products in the hope

that prices will pick up.

Chinese citric acid exports to the EU increased 50 per cent between 2019 and last

year. Over that period, Citribel had to raise prices 50 per cent as its own costs

soared, while China’s export price decreased 6 per cent, according to market data

cited by Citribel.

“The Chinese are selling their final product in Europe at around €1,000 per tonn

which is 40 to 50 per cent below my cost price. On average, we have 37 per cent

anti-dumping duties, which is just not high enough,” Merckx said.

Jonathan Holslag, Tienen’s mayor, said the debate about Chinese subsidies had been

running for years, but Europe had failed to act, unlike the US. “This situation has

been 20 years in the making . . . Citric acid is a good example. Chinese production

capacity has been growing for a long time but growth has been stellar in the last 10

years,” he said.

In Europe, the result has been a vicious circle of decline. A report by Cefic fou

that investment in the European chemicals sector fell 80 per cent last year, with

factory closures running at six times the rate of three years ago.

Cefic’s Lemoine said China’s approach to base chemicals had left the indust

watching closely to see whether it was preparing to move into the more advanced

“speciality” chemical market, where the EU still retains an advantage.

“The latest [Chinese] five-year plan talks of moving to ‘high-end transformation’.

the next worry is, will they go for specialities?”

But analysts said Chinese companies’ ability to collectively build a controlling market position was not translating into monopoly pricing power.

Analysis by the Center for Strategic and International Studies found that Chinese

companies in clean energy and many other sectors were not exercising monopoly

power to raise prices

“This also seems unlikely in the future as it would require the government to force

closure of large swaths of existing capacity,” said Michael Davidson, senior associate in Chinese business and economics at CSIS.

Citribel’s Merckx said the greater danger to Europe would be if Beijing suddenly

decided to choke off supplies of vital commodities or resources. “If China says ‘no

citric acid any more’ then the shelves will very quickly be empty.