The European Union wants to retain its industrial edge and competitiveness in a world shifting more to digital and green products, but has found itself worryingly dependent on others, particularly China for critical minerals.
As geopolitical tensions rise, after Russia’s invasion of Ukraine and with a U.S.-China standoff, risk is a key word for the 27-nation bloc’s economic policy as it ponders how to guarantee supply chains and how widely to share technology.
U leaders will discuss these topics at their summit on Friday.
DE-RISKING
The bloc wants to limit its dependency for certain strategic products, particularly those required for its green transition such as lithium used in electric vehicle batteries or rare earths found in wind turbine magnets.
China now processes nearly 90% of rare earth elements and 60% of lithium globally.
The European Union wants instead to boost domestic extraction, recycling and processing of critical raw material needs by 2030 and ensure no third countries provide more than 65% of any one key mineral.
The EU repeats that de-risking does not mean decoupling from China, but says it has learned a tough lesson from relying on Russia for natural gas and then being cut off after Russia’s 2022 invasion of Ukraine.
EU wariness towards China has grown due to Beijing’s subsequent closer ties with Moscow. At the same time, the EU’s trade deficit with China has widened to 400 billion euros ($420 billion), double the level of five years ago.
