Financial Times: EU Plans to Force Companies to Reduce Reliance on Chinese Supply Chains

(CNA, Brussels, May 18, Foreign Report) The UK's Financial Times reports that the European Union (EU) is drafting plans that could force European companies to source key components from at least three different suppliers to reduce the EU's dependence on China. According to two informed EU officials, this new regulation will affect a small number of companies in key industries, such as chemicals and industrial machinery, which have complained about a surge in cheap imports from China. The related proposal is a response to Beijing's export controls on key technologies. According to the report, the new law will set a cap on the proportion of purchases from a single supplier, expected to be around 30 to 40%. The remaining components must be sourced from at least three different suppliers, and not all from the same country. Officials noted that EU Trade Commissioner Maros Sefcovic wants to address the EU's daily trade deficit of about 1 billion euros and protect businesses from the impact of China's 'weaponization of trade.' Last year, some European car production lines came to a halt after Beijing imposed export controls on rare-earth magnets and other components. According to the aforementioned officials, the surge in Chinese products has severely hit European manufacturing. To curb this situation, Sefcovic plans to impose a series of punitive tariffs on Chinese chemical and machinery products. A senior official from the European Commission stated, 'In many areas, we are step by step becoming dependent on Chinese exports. Dependency comes at a price, so we must redouble our efforts (to diversify sources).' The official pointed out that China's massive investment in its manufacturing sector poses an urgent threat to the EU's industrial base. According to an International Monetary Fund (IMF) report, China heavily subsidizes its domestic manufacturing industry. (Compiled by: Chen Cheng-chien) 1150518