EU trade chief to meet CEOs over China strategy

European Commission Chief Maroš Šefčovič is set to host a meeting with European CEOs on September 18 to gather their opinions on the EU's efforts to diversify critical supply chains away from China. According to four sources familiar with the event, the Commission has proposed a "diversification tool" to encourage companies to source critical imports from at least three different suppliers when alternatives are available.

However, before formally proposing this measure, Šefčovič wants to secure industry support and understand the extent to which companies are willing to reduce their dependency on China, considering the associated costs. This effort follows the EU's increased engagement with Chinese officials over the summer, aimed at reducing the EU's €1 billion daily trade deficit with China.

The meeting will take place two days after Commission President Ursula von der Leyen delivers her State of the Union speech, where she is expected to address concerns about China's threat to the EU's industrial base. Following technical talks with Chinese counterpart Wang Wentao in mid-September and a visit to Beijing in early October, Šefčovič will then speak with Chinese officials via videoconference.

The Sept. 18 meeting is expected to include CEOs from the machinery, electrical components, automotive, and chemical sectors. Šefčovič has expressed optimism that business leaders are increasingly recognizing that the cost of diversification is lower than the cost of disruption, and he hopes to further develop this logic through the forum.

The meeting will also seek input on the best design for such a tool and how to gain buy-in from leading companies.