EU announces plan to diversify suppliers and reduce dependence on China

A European Commission will present in December a plan to diversify the supply chains of the European Union (EU) and reduce dependence on single suppliers when Brussels warns of the effects of Chinese competition.

“ In December, we will present a package we call Diversifying the EU. This package will not give priority to any specific country and will help European companies diversify their supply chains,” said EU executive leader Ursula von der Leyen, speaking at the plenary session of the European Parliament in Strasbourg.

“ I think that the principle that should guide all of us and all companies in the European Union is very simple: there should be no critical dependence on a single supplier,” he added.

On that occasion, the President of the European Commission warned of the imbalance in trade relations with China, indicating that the European trade deficit with China reached EUR 2025 billion a day.

Defending that the EU should reduce its economic vulnerabilities and strengthen its ability to respond to external trade pressures, Ursula von der Leyen also announced “a new instrument that will enable us to act more quickly and immediately restrict access to the single market when our interests are threatened”.

“ Dissuasion works when others know that we are prepared to answer ", pointed out.

The initiative arises in a context where trade restrictions and the control of critical raw materials are increasingly used as instruments of geopolitical influence.

Brussels also intends to present a solidarity package to ensure that no Member State or industrial sector has to face any economic retaliation measures in isolation.

According to the figures quoted by Ursula von der Leyen, Chinese companies receive up to eight times more subsidies than comparable companies from other countries.

“ The factories are under pressure. We are witnessing the loss of jobs at the industrial heart of Europe,” he said.

The strategy is announced at a time of growing trade tension between Brussels and Beijing, with the EU seeking to respond to the competitive advantages it gives to Chinese state support, without abandoning dialogue with one of its main trading partners.

Ursula von der Leyen advocated a three-pronged approach: dialogue when it produces results, the use of trade defence instruments when necessary and the creation of mechanisms to reduce economic dependence.

“Europe must be prepared to act when dialogue does not produce results,” he said.

France and Germany, in a letter sent to Ursula von der Leyen at the beginning of the month, advocated strengthening EU trade instruments to respond to Chinese competition, including state subsidies and overproduction, and reducing strategic dependencies.

In this speech, on last week’s European summit, she also announced “a plan for a real European Energy Union”, given the current energy crisis, which aims to “take much better advantage of the potential” that already exists.

“Speaking of energy and our sanctions against Russia, we imposed energy sanctions on Russia because of its war of aggression against Ukraine [...] and I want to be absolutely clear: these sanctions will remain until Russia puts an end to the war,” he said.