EU moves to propose diversification law to cut reliance on China

The European Commission will propose a new law requiring EU companies to diversify their sources of key supplies, although it may prove surplus to

requirements if they proactively de-risk from China, its president Ursula von der Leyen said.



European Union leaders meeting in Brussels agreed on Friday that the EU executive should enter dialogue with the bloc's main trading partners on "global macroeconomic imbalances" as well as reviewing whether new trade measures are needed.



The focus was on China, although the world's second-largest economy was not named in the conclusions of their summit. Von der Leyen said the Commission will propose a measure to promote diversification because businesses had de-risked at far too slow a pace. The issue came to a head last year when China

exploited its dominance in processing of critical minerals by placing export restrictions on rare earths.



The best-case scenario was that companies stepped up their efforts to de-risk, suggesting the measure might then be redundant, von der Leyen said.