EU to diversify critical supplies amid concerns over dependence on China

The European Commission will propose new legislation requiring EU companies to diversify their sources of key supplies, European Commission President Ursula von der Leyen has said, amid growing concerns over reliance on China and global trade imbalances.

The proposal comes after European Union leaders meeting in Brussels agreed on June 19 that the Commission should open dialogue with major trading partners on “global macroeconomic imbalances” and assess whether additional trade measures are needed, Reuters reports. 

Although China was not explicitly named in the summit conclusions, it was widely understood to be a central focus of the discussions.

Von der Leyen said the Commission plans to introduce measures aimed at encouraging supply chain diversification, arguing that European businesses have been too slow to reduce strategic dependencies.

The issue gained urgency last year when China, which dominates global processing of critical minerals, imposed export restrictions on rare earths.

“The best-case scenario was that companies stepped up their efforts to de-risk, suggesting the measure might then be redundant,” von der Leyen said.

“There is a need for improvement. We've seen the figures, they speak for themselves, and we have to rebalance our relationship,” she added.

EU diplomats say there is growing agreement among the bloc’s 27 member states that the trade imbalance with China has become a structural concern, with the goods deficit now estimated at around €1 billion per day.

European Council President António Costa, who chaired the summit, said engagement with China remains essential but described the deficit as unsustainable.

“We cannot continue to raise this issue without any concrete results. And until now, unfortunately, China didn't deliver,” Costa said.

The discussions also follow increased transatlantic trade tensions and reduced access to the U.S. market, further heightening concerns in Brussels over economic resilience.

Belgian Prime Minister Bart De Wever said EU leaders also agreed on the need for coordinated responses in the event of retaliation from third countries.

“Retaliation will not affect everyone equally. Not everyone is equally vulnerable. Some are highly vulnerable. Everyone is vulnerable to some extent, including us,” he said.

By Sabina Mammadli