EU prepares sweeping measures to shield industry from China

European Commission leaders are preparing to harden the EU's economic stance toward China amid growing fears of de-industrialisation, with officials set to pitch new trade and industrial measures at a pivotal debate on Friday. Trade Commissioner Maros Sefcovic will propose a "diversification instrument" requiring companies in critical sectors to maintain at least three suppliers across two or more countries, while Industry Commissioner Stephane Sejourne will advocate for broader use of the foreign subsidies regulation to combat market distortions caused by subsidised Chinese firms. Both officials support expanded use of safeguard measures, which could slash investigation times for import surges to around six months. Major EU member states including Germany, France, Italy, Spain, the Netherlands and Poland offered qualified support for the bloc's Industrial Accelerator Act at a competitiveness council debate on Thursday. The act, proposed in March, would impose strict conditions on non-EU investments accessing European public subsidies, procurement markets and fast-track permitting, requiring firms in sectors like electric vehicles and batteries to establish joint ventures with local partners, transfer technology and conduct research and development in Europe. Some member states warned that the emergency facing EU industry demanded urgent action. The measures represent a dramatic policy shift that EU officials are increasingly calling "China shock 2.0," in reference to the original wave of Chinese import competition that swept through Western economies in the 2000s. At the heart of Brussels' concerns is the belief that Europe's industrial base could be decimated within years as Chinese competitors out-compete their European rivals on price and quality across domestic, European and third markets. The Industrial Accelerator Act has been described as a "reverse Deng," after former Chinese leader Deng Xiaoping, whose policies attracted foreign manufacturing to China and are credited with kick-starting the country's economic miracle.