Europe's share of global production fell from 22 percent in 2006 to 14 percent in 2022, according to an annual report by Plastics Europe.
China's share jumped from 21 percent to 32 percent over the same period, the report showed.
"Our European plastics industry is in trouble," said Jean-Yves Daclin, the head of Plastics Europe operations in France.
The group's "Circular Economy for Plastics" report warned of a "a growing competitiveness gap between Europe and the rest of the world".
The decline is linked to rising imports from China and the United States in recent years, Daclin said.
The European Union's 27 member countries, together with Britain, Norway and Switzerland, produced 58.8 million tonnes of plastics in 2022.
North America's global share has also fallen, dropping from 24 percent in 2006 to 17 percent in 2022.
Excluding China and Japan, the rest of Asia, Oceania, Turkey and Ukraine accounted for 19 percent of the global market in 2022 compared with 14 percent in 2006.
The Middle East and Africa regions have also taken a bigger slice, rising from a combined six percent to nine percent.
Japan's share fell by half to three percent while Latin American dropped slightly to four percent.
The Plastics Europe report also said that 26.9 percent of European plastics waste is now recycled.
Some 175 countries have agreed to conclude by 2024 a binding agreement to combat plastic pollution.
Kenya hosted the latest negotiations in November, which ended with disagreement about how the pact should work and frustration from environment groups over delays and lack of progress.
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