Von der Leyen unveils EU diversification instrument to confront China trade deficit
European Commission President Ursula von der Leyen said the EU is set to develop a new diversification instrument to tackle its unsustainable trade deficit with China. The tool will sit within the bloc's trade defence toolkit and move with the political backing of EU leaders. Efforts by European firms to shift supply chains away from China are accelerating.
The European Commission has announced it will create a new diversification instrument to address the deep trade deficit with China. Commission President Ursula von der Leyen said new trade defence tools would be developed to confront an imbalance she described as unsustainable.
According to Euronews, the proposal carries the political backing of EU leaders. The instrument will encourage alternative supply sources, long-term contracts for critical raw materials and a fresh framework to support production capacity inside Europe.
European industry groups are placing particular weight on reducing structural dependence in semiconductors, defence and green transition supply chains. Member states will discuss in the coming weeks how the instrument will fit with investment incentives and the bloc's compliance rules.
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