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The Volkswagen stands near the cranes of a construction site in Wolfsburg, Germany. File photo: CFP

The trouble faced by German car giant Volkswagen (VW) not only represents a blow to Germany's industrial prowess, but also serves as a reminder of the pressing need for the EU to find a balanced way to improve industrial competitiveness.

VW plans to shut at least three factories in Germany, lay off tens of thousands of staff and shrink its remaining plants in Germany, the company's works council head said on Monday, Reuters reported.

As a major player in the European automobile industry, VW's development serves as a crucial barometer for the sector, reflecting broader industrial trends and shifts in the bloc.

The technological advantages of German auto manufacturers persist, and they are still world-leading companies in many fields, including brand advantages. But the EU's attempt to resorting in protectionism will ultimately hurt the competitiveness of its most advantageous industry.

The first closure of domestic plants in the company's 87-year history underscores the harsh realities confronting the European auto industry. High energy costs, the effects of US industrial policies, intensifying international competition, technological advancements, automation challenges, uncertainties in the policy landscape, and the burdens of high welfare and wage systems all intertwine to create a complicated situation that constrains the development pace of European industry.

It is against this backdrop that VW has made a difficult decision, prompting deep reflection on how the EU can balance the industrial interests of its member states. The EU as a whole faces the challenge of maintaining internal industrial competitiveness while addressing external pressures. 

Some member states and political forces within the EU are tending to adopt trade protectionist measures, attempting to shelter domestic industries, particularly against imports of Chinese electric vehicles (EVs), by raising tariffs and other means. However, this approach has faced strong opposition from several member states and auto companies. 

German Chancellor Olaf Scholz has openly expressed his opposition to tariff conflicts, while German auto companies, including VW, have urged Germany to vote against the introduction of EU tariffs on Chinese EVs. They believe that, in the long run, such measures actually harm the competitiveness of the European auto industry. 

As the largest economy of the EU, Germany undoubtedly possesses strong industrial competitiveness and supports trade with China. However, some member states with weaker competitiveness are concerned that trade with China may exacerbate competition and harm their own interests. This divergence has thrown the EU into a dilemma regarding how to maintain industrial competitiveness.

Yet, if the EU wants to enhance its economic competitiveness, it has no choice but to create a more conducive environment and provide more development space for competitive companies. This involves not only internal reforms and innovation but also fostering cooperation with countries like China. 

In the face of competition, EU companies need to focus on improving their technology and efficiency, rather than resorting to a protectionist approach to external challenges. 

Protectionism does not address the underlying issues and may lead less competitive countries to become increasingly reliant on such measures, ultimately hindering the progress of the entire EU. The overall development and enhancement of the EU's competitiveness require unified coordination, which is crucial for the bloc's economic future and global competitiveness.

The current situation shows that the EU faces significant challenges in coordinating internal interests. Shifting the responsibility for enhancing competitiveness by hyping up China-related issues and attempting to protect its own interests by limiting cooperation with China is not a viable approach. 

The EU needs to recognize that the true enhancement of competitiveness comes from internal strength and cooperation, as well as effective interaction with external markets.

VW's restructuring plan comes as a shock, it also serves as a wake-up call for the development of European industry. In the face of changes in the global economic landscape and development trends in the auto sector, the EU needs to think deeply about how to find a balanced way to maintain industrial competitiveness and promote industrial upgrading and transformation. Only by doing so can it ensure its own sustainable development and competitiveness in future competition.