EU to develop new tools to tackle unsustainable trade deficit with China: Report
New Delhi, June 21
European Commission President Ursula von der Leyen has said that the European Commission will develop new tools to counter macroeconomic imbalances, most notably the "growing and unsustainable" trade deficit with China, according to a report.
Von der Leyen said the diversification instrument would be country-agnostic, focusing on helping European companies in specific sectors de-risk faster, as supply chain diversification has so far been too slow, according to Euronews.
"Europe has already built an extensive toolbox in recent years. Now we must use it more proactively and more strategically to defend our European interests," she said at a press conference closing this week's European Council summit.
According to media reports, the idea would be to require companies to diversify the supply of critical components from one or two countries to avoid critical chokepoints that can be weaponised.
Von der Leyen said EU leaders showed unity and clear support for a European response to the current situation, while also stressing that dialogue with China remains crucial.
At the same press conference, European Council President António Costa emphasised that the status quo cannot continue.
"Our strategy is clear: de-risking, not decoupling, while we engage in dialogue," he said. "But we need to address the challenges we are facing. A €1 billion trade deficit per day is simply unsustainable. We cannot continue to raise these issues without any concrete results."
Not all member states favour a more aggressive trade policy toward Beijing, which has already threatened retaliation. Germany is heavily dependent on exports to China, while Spain has positioned itself as Europe's hub for Chinese investment; both are generally wary of provoking Beijing.
Senior diplomats are reported to have stressed the importance of keeping dialogue with China open, as commercial relations may become even more important given the erratic behaviour of the US government and its assertive trade agenda.
However, France has led calls for stronger tools to contain China's overcapacity and market-distorting subsidies, and suggested the leaders' summit shows Brussels is taking a harder line on Beijing, the report added.
— IANS
Reader Comments
Interesting how the EU wants to diversify supply chains away from China. India should position itself as a reliable alternative—our textile, pharma, and electronics sectors could benefit if we play our cards right. Smart diplomacy needed!
De-risking without decoupling? Sounds like a tightrope walk. EU companies will struggle unless they start investing in alternative sources now. India could be a key partner here, especially in pharma and IT hardware.
This is where India's 'Make in India' can shine. But we need to fix our own infrastructure and ease of doing business first. Can't be saying 'take us seriously' while we still have red tape issues. 🇮🇳
One billion euro trade deficit per day is indeed unsustainable. But dialogue with China is necessary—trade wars never end well. The EU's balancing act between France's hawkish stance and Germany's caution is typical European politics.
As an Indian, this feels like déjà vu. We've been battling Chinese trade deficits for years. The EU should learn from our experience: you can't just talk, you need tariffs and domestic industry support. But please don't copy our protectionist excesses. 🙏
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