EU’s Derisking From China: A Daunting Task
With economic security as a major concern, the EU has recently turned to “derisking” from China. The EU strategy entails reducing critical dependencies and vulnerabilities, including in EU supply chains, and diversifying where necessary, while recognizing the importance and need to maintain open channels of communication.
An analysis of the bilateral trade relations over the past decade suggests that derisking still remains elusive. In contrast to the USA, the EU has not reduced the share of Chinese products in its imports. Overall, there has been little or no diversification in some unsophisticated, labor-intensive, low-value-added sectors where it was not expected. At the same time, the EU’s exports to China have remained relatively constant, although direct export exposure to China differs significantly across member states. The picture emerging from the observation of direct investment flows to China is more mixed, with EU greenfield investments on the rise, while European M&As have slowed sharply. Moreover, there is a growing concentration of EU FDI in China among a small number of firms, countries, and sectors. While the jury is still out on the success of the EU’s derisking attempts, many factors do not bode well for the future of the strategy. For derisking to materialize, several conditions need to be met, including better and tighter coordination between EU member states, and this is no easy task. However, with problems and possible solutions now clearly identified, what remains to be done is to walk the talk.
Nicolas, F. (2025, October). EU’s Derisking From China: A Daunting Task. Asia Europe Journal, 23 (2-3). https://doi.org/10.1007/s10308-025-00750-3
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