EU Commissioner Urges Businesses to Diversify Suppliers Amid China Tensions
Quick Look
- EU Industry Commissioner Stéphane Séjourné urged EU businesses to diversify their suppliers away from China due to escalating trade tensions and Beijing's threats.
- The EU is considering legislative measures, including forcing car producers to source chips from multiple suppliers, amid concerns over China weaponizing critical supplies.
AI-generated summary
Why It Matters
EU Industry Commissioner Stéphane Séjourné has called on EU businesses to diversify their suppliers due to rising trade tensions with China. Beijing has made threats, and the EU is strengthening legislation against China, which previously restricted exports of rare earths and chips.
EU Industry Commissioner Stéphane Séjourné called for EU businesses to diversify their suppliers on Friday as trade tensions with China ramp up.
The comments come as Beijing has made repeated threats towards the EU in recent weeks, while Brussels seeks to strengthen its legislation against its Asian rival.
Last year, China restricted exports of rare earths and chips, strategic for the EU’s green technologies, defence and automotive industries.
“Do not make 100% of your supplies in one country,” Séjourné told EU businesses after a meeting with the EU’s 27 trade ministers in Brussels. He added: “The global geopolitical situation shows that your ability to provide yourself abroad must also depend on other types of countries and also on European production.”
The European Commission has so far issued guidance to EU companies and Séjourné signalled that if they did not move, the EU executive would "perhaps have to move to the next step.”
Measures force car producers to diversify
Internally, the Commission is already working on a proposal to force car producers to source chips from multiple suppliers, Euronews has revealed.
Last year, a spat between the Dutch government and the Chinese chip company Nexperia, based in the Netherlands, caused shortages of chips for EU industries after Beijing blocked exports in retaliation.
EU Trade Chief Maroš Šefčovič told Euronews at the time that China was “weaponising” critical supplies for EU industry.
Brussels and Beijing have been at loggerheads since the EU presented several proposals restricting China’s access to the EU single market.
The so-called “Industrial Accelerator Act” aims to favour EU companies in public procurement and impose strict conditions on Chinese investments in the bloc. Meanwhile, a Cybersecurity Act could exclude Chinese telecoms companies from the EU market.
Beijing has directly threatened the EU with retaliation if it moves forward with those proposals. China repeated the threats after media reports about potential EU measures against cheap Chinese imports flooding the EU market.
An orientation debate is set to take place in Brussels between EU commissioners on 29 May to decide on the EU’s strategy as its trade deficit with China becomes more critical month after month.
What to Watch
AI outlook — possibilities, not facts
The European Commission will likely propose or implement measures to force car producers to diversify chip suppliers.
Very likely · Within months
China will likely retaliate with further trade restrictions or diplomatic pressure if the EU proceeds with its proposed legislation.
Likely · Within weeks
Open Questions
- What specific "next step" will the European Commission take if companies do not diversify?
- What are the details of the proposed Cybersecurity Act and its potential impact on Chinese telecoms companies?
- What specific measures will be discussed in the orientation debate on May 29th?
- How will the EU balance protecting its market with maintaining trade relations with China?
