China’s success with state capitalism poses security concerns and huge economic challenges for western market economies. Its economy has boomed over the past 20 years, with private industry contributing much to recent success. And while private industry has helped the rise of China, it’s only one part of the economy. State enterprises and state-controlled firms play a dominant role; the former accounts for 35% of China’s GDP. Amidst uncertainty over how the trade-off between private corporate dynamics and government management of firms will develop, Achim Wambach says Europe needs to work with China to create fair competition and avoid unilateral protectionism.