As China’s comprehensive strategic partner and largest trading partner, the EU’s policy trends have an important impact on China. This paper examines the impact and the channel of European monetary policy shocks on the firm’s total factor productivity (TFP) in China. We find that the tightening of European monetary policy has a significantly larger contractionary effect on the firm’s TFP in China, while firms’ participation in global value chains (GVCs) amplifies this negative impact in two ways: it reduces the quality of firms’ imports of intermediate goods, and raises firms’ inventories of non-finished goods. Moreover, firms participated in GVCs that are more downstream and have higher trade dependence, as well as foreign firms, are more affected by European monetary policy, while firms participated in GVCs that are more upstream and have larger inventories can mitigate the negative impact of European monetary policy. This paper provides insights and references for optimizing the allocation of enterprise resources and factors, improving the productivity of enterprises and promoting the high-quality development of China’s economy.