EU Targets China Trade Imbalance with Mandatory Diversification Law

The proposed law arrives after existing voluntary efforts proved sluggish, leaving the bloc exposed to export restrictions like those China imposed on rare earths last year. While Brussels officials hope the mere threat of regulation will spur private firms to act, the current dependency remains a point of friction. Council President Antonio Costa characterized the daily €1 billion deficit as unsustainable, demanding concrete results from Beijing after years of stagnant negotiations.

Beyond individual supply chains, the 27-member bloc is moving toward a unified defense strategy. Belgian Prime Minister Bart De Wever noted that leaders have agreed to stand together against potential economic retaliation from third countries. This collective stance addresses the uneven vulnerability of member states, ensuring that Beijing cannot exploit individual economic weaknesses. As the EU balances its reliance on Chinese markets with the pressure of diminished access to U.S. trade, the new policy represents a shift toward more assertive economic statecraft.