European Commission leaders are preparing to harden the EU’s economic stance towards China at a pivotal debate on Friday, opening the door to a new wave of trade and industrial measures later this year.
Sources indicated that a majority – though not all – of the 27 commissioners, including President Ursula von der Leyen, are supportive of a more robust trade and industrial policy, amid rising fears of de-industrialisation, in what is now widely described in Brussels as the “China shock 2.0”.
Trade commissioner Maros Sefcovic is set to pitch a new “diversification instrument” which would insist that companies in some critical sectors ensure they have three or more suppliers in two or more countries, amid fears of overreliance on Chinese supply chains.
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Industry chief Stephane Sejourne, meanwhile, is set to advocate the broader use of the foreign subsidies regulation (FSR). The tool has been widely used against individual companies, but the French commissioner is said to support using the tool in a much broader, sector-focused way to combat perceived market distortions by subsidised Chinese firms.
Both of those officials support the more widespread use of safeguard measures, seen as emergency tools that can place tariffs or quotas in the case of surges in imports. With an eye on the chemicals and machinery sectors, there is the view that time spent on anti-dumping and anti-subsidy probes could be halved to around six months through the use of safeguards.
At the heart of their concerns is that Europe’s industrial base could be decimated within years due to the breakneck growth of Chinese competitors, which are out-competing their European rivals on price and often quality in China, Europe and in third markets around the world.