In recent years, the European Union (EU) has increasingly relied on China for critical technologies, pivotal for its digital and green transition. As the market of electric vehicles (EV) grows rapidly, demand for critical inputs has also soared, including lithium-ion batteries. China holds a dominant position along the EV battery supply chain, which has resulted in high exports to Europe and growing integration with the EU market. The EU finds itself in a delicate position, faced with the challenge to disentangle from dependencies on Chinese critical technologies, while preserving foreign investments in critical sectors and boosting local manufacturing capacity. Several measures have been introduced at the EU level, but a more all-round approach and longer-term industrial policies will be needed to scale up the EU’s de-risking capacity.
Policy Recommendations:
- Prioritise innovation to reduce current dependencies
- Promote green-er technologies
- Diversify the most critical gaps of the supply chain
- Pursue a cohesive and shared approach across EU Member States
Stay tuned with us by reading more: Reconnect China_Policy Brief 13_EU’s Technical Dependencies towards China