European Commission leaders are preparing to adopt a stricter economic stance toward China in an upcoming debate scheduled for this Friday. Trade Commissioner Maros Šefčovič plans to propose a new diversification mechanism aimed at reducing dependency on Chinese supply chains. Meanwhile, Industry Commissioner Thierry Breton supports the broader application of foreign subsidy control regulations to mitigate market impacts caused by Chinese companies.
May 28, Kathmandu – Ahead of an important debate this Friday, European Commission leaders are gearing up to strengthen the European Union’s economic approach toward China. This shift is expected to pave the way for a new wave of trade and industrial measures by the end of this year. Sources say there is growing concern in Brussels over a phenomenon referred to as “China Shock 2.0,” or fears of “de-industrialization.” The majority of the 27 commissioners, including President Ursula von der Leyen, reportedly favor a tougher trade and industrial policy.
Trade Commissioner Maros Šefčovič intends to introduce a new “Diversification Instrument” designed to lessen the EU’s excessive dependence on Chinese supplies. This instrument will request companies in critical sectors to secure at least three or more suppliers from two or more countries. Industry Commissioner Thierry Breton advocates for the expanded use of the Foreign Subsidies Regulation (FSR), which until now has been enforced primarily against individual companies but may now be applied on a regional and broader scale to address the market distortions attributed to subsidized Chinese firms.
Both commissioners support increased use of safeguard measures, which are emergency tools allowing the imposition of tariffs or quotas in cases of supply surges. The plan targets the chemicals and machinery sectors, aiming to limit anti-dumping and anti-subsidy investigations to approximately six months through the use of safeguard measures. Their main concern is that the rapid growth of Chinese competitors could cause significant harm to Europe’s industrial base within a few years. These Chinese companies are surpassing their European rivals in both price and quality in markets across China, Europe, and the rest of the world.
