cross-posted from: mander.xyz/post/43380797

European firms are accelerating efforts to diversify away from Chinese supply chains as Beijing’s self-reliance drive and export controls deepen global trade uncertainty, the European Union Chamber of Commerce in China said on Wednesday.

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The EU’s trade imbalance with China widened to 1:4 in container terms, compared with 1:2.7 in 2019, the lobby group said in a report. Persistent deflation and the ongoing depreciation of the yuan against the euro have exacerbated European firms’ trade woes.

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As a result, more than 70% of European firms in China have reviewed their supply chain strategies over the past two years, the report said … Sectoral disparities are stark: 80% of pharmaceutical firms and 46% of machinery makers are increasing localisation, while 33% of IT and telecom firms and 25% of retailers are diversifying away from China, according to the report.

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The report said China’s willingness to use its supply chain dominance to exert pressure on trade partners is being met with increasing pushback from affected countries, such as a more “offensive” China policy from the EU.

The European Commission will make proposals next month to bolster EU industry, with requirements to prioritise locally manufactured goods that would reduce its reliance on imports from China.

#world