Expanding Trade Friction Between China and Europe, and 'Bubble Concerns' in AI Stocks — 3 Strategic Perspectives to Know Now
In October 2025, global economic tensions are rising once again. As China expands retaliatory trade measures not only against the U.S. but also against Europe, shaking global supply chains, 'bubble concerns' regarding the surge in AI stocks have begun to blanket the market. While these two trends represent different vectors—geopolitical risk and a technology investment boom—they are simultaneously exerting pressure on investor sentiment.
1. China's Retaliatory Measures, Europe Also a New Target
1-1. 'Supply Shock' in Shipbuilding and Rare Earths
According to Reuters, in mid-October, China announced sanctions on shipbuilding-related companies and additional tariffs on port-related activities, including South Korean companies with deep ties to the U.S. as targets. At the same time, it is showing moves to expand rare earth export restrictions, strategically tightening supply to the U.S. and Europe.
This is a classic supply chain control pressure strategy, backed by China's dominance as the 'world's largest shipbuilder' since 2017.
1-2. Europe's Countermeasures—The 'Mandatory Technology Sharing' Concept
Meanwhile, the European Union (EU) is wary of the rise of Chinese EV manufacturers. According to the Financial Times, as Chinese EVs like BYD rapidly increase their share in the European market, the European Commission is considering a proposal to 'make technology sharing mandatory when Chinese companies conduct business in Europe.'
This is a move to turn the 'technology transfer conditions' that China has imposed on foreign companies in the past against them, and Europe is also beginning to steer toward its own 'defensive industrial policy.'
2. Resurgence of AI Bubble Concerns and Market Fragmentation
2-1. Majority of Fund Managers Judge Market as 'Overheated'
According to the latest Bank of America survey, 54% of institutional investors responded that AI-related stocks are 'overvalued,' expressing caution regarding a P/E ratio (28x) that exceeds the 10-year average.
In particular, while concentrated investment in giant tech groups like the 'Magnificent 7 + Broadcom' continues, there are strong voices concerned about a 'speculative rotation' given the current situation where even AI startups that do not generate profits are being bought.
2-2. Divergence from the Real Economy, Spilling Over into the Crypto Asset Market
According to CoinDesk, $150 billion vanished from the crypto asset market in mid-October. This is because the adjustment in AI stocks and the friction between the U.S., China, and Europe overlapped, causing capital to flow out of risk assets in general.
The structure where capital is excessively concentrated in 'AI-related infrastructure' and 'semiconductors,' leading to 'delays in actual demand' and 'price formation based on expectations,' is reminiscent of the dot-com bubble of the early 2000s.
3. The 'Sovereign AI' Concept Europe is Challenging and Its Counteroffensive
3-1. Rebuttal to NVIDIA and the Formation of an 'AI Independent Sphere'
According to Bloomberg, NVIDIA CEO Jensen Huang's remark that 'European AI development is too slow' was met with strong backlash from France and Germany. They have announced billions of euros in investments in AI data center construction and cloud infrastructure one after another, aiming to establish 'AI sovereignty.'
In France, with government support, companies developing proprietary LLMs like Mistral AI are growing rapidly. Leveraging data utilization and ethical regulations within Europe, they are aiming for AI models that differ from both the U.S. and Chinese camps.
3-2. The Next Stage of Technological Competition—A New Cold War of 'Supply Chain x AI'
These moves signify not just technology investment, but the fusion of supply chain strategy and AI hegemony. In addition to friction in foundational industries such as shipbuilding, rare earths, and semiconductors, AI infrastructure (GPUs, cloud, data centers) is becoming the next 'geopolitical frontline.'
Conclusion: The New Risk Structure Indicated by Market 'Fragmentation'
Trade friction between the U.S., China, and Europe and concerns over an AI bubble are beginning to link up as a dual risk of technology and geopolitics.
On the other hand, moves such as Europe's technological sovereignty, the multipolarization of the AI industry, and the reorganization of semiconductor supply could potentially create a more decentralized innovation ecosystem in the long term.
However, in the short term, it is inevitable that the uneven distribution of capital and supply chain disruptions will increase global market volatility.
