The EU is drawing up plans to force European companies to buy critical components from at least three different suppliers to reduce the bloc's dependence on China, according to Financial Times sources.
The new rules would affect businesses in a number of key sectors, such as chemicals and industrial machinery, which have complained about a surge in cheap imports from China, according to two EU officials familiar with the matter.
The proposals come in response to Beijing's restrictions on exports of key technologies.
The new law would set caps, estimated at around 30-40%, on what can be purchased from a single supplier. The rest of the components should come from at least three different suppliers, not all from the same country.
EU trade commissioner Maroš Šefčovič wants to tackle the bloc's €1bn-a-day trade deficit and protect companies from China's “weaponisation of trade”, officials who spoke to the FT said.
Last year, some European auto production lines shut down after Beijing imposed barriers on the export of rare-earth magnets and other components.
Šefčovič plans to impose a series of severe tariffs on Chinese chemicals and machinery to stem a dramatic surge that has strained European manufacturers, officials said.
“In many areas we are gradually becoming dependent on exports from China. Dependencies come at a price and therefore we must redouble our efforts [de diversificare]”, said a senior official of the Commission.
The European Parliament is also preparing something that upsets China
The revelations about Brussels' plans come as the European Parliament is in the early stages of adopting legislation that would set strict rules on EU control and ownership of production in critical industries and limit “high-risk” cyber security suppliers, which upset China.
Beijing has insisted that key provisions on origin, procurement and technology requirements in the new manufacturing rules be removed, and definitions of the term “high risk” in the cybersecurity rules be made less harsh.
Europe's push for greater independence comes as China and the US try to mend their trade relationship, and President Donald Trump went to Beijing last week with a delegation of chief executives aimed at resolving trade issues with China.
European and American chief executives have long criticized increased exports by Chinese firms receiving subsidies at home as unfair, and have called for greater market access in China, where certain sectors are restricted to foreign investors.
