EU’s De-risking Strategy: What are implications for Sino-European Relations?

Trump’s recent decision to impose record-high tariffs on a large number of countries around the globe is just another confirmation that the world is rapidly changing. In this context, as the US is deliberately distancing itself from Europe, the question arises: how will that same Europe react vis-à-vis its eastern partner—China? Although there are voices suggesting that China should contained, the EU has opted for a more pragmatic stance. In fact, despite growing differences in their worldviews, these blocs are compelled to cooperate. Since 2019, the EU has simultaneously perceived China as a “partner, competitor, and systemic rival” – a position reaffirmed in 2023. Rather than opting for decoupling, which implies reducing economic engagement, the EU has embraced a strategy of de-risking: maintaining cooperation while actively working to minimise strategic vulnerabilities tied to deep economic dependence. The basic argument is that such strategy is comprehensive and poised to redefine Sino–European relations moving forward.

How Did We Arrive at This Strategy?

1. Trade Dependence and Imbalance

Following the end of the COVID-19 pandemic, the EU’s trade deficit with China has further increased. At the same time, the European Central Bank warns that China has not only significantly expanded its presence in global export markets but that its export product prices have dropped, and its production exceeds domestic demand. The surplus is being exported to global markets, creating additional pressure on European manufacturers to cope with increasingly fierce competition from China. It is concluded that the EU and China are now “in direct competition” as trade rivals, and that there is a clear correlation between the rise of Chinese competitiveness and the decline of Europe’s.

2. Protectionist Trend

Global balance is shifting: all major economies are actively working to reduce dependence and increase self-sufficiency. The slogan “America First” brought Trump back to the White House, while China continued to pursue further technological advancement and vertical supply chain integration—from raw material extraction to processing, manufacturing, and transport. While it may still be too early to speak of deglobalization, state interventions through trade policy manipulation are undeniably on the rise. Particularly concerning is China’s policy of “national self-sufficiency” in high-tech and energy sectors, which further limits export opportunities for European companies. Given the EU’s traditionally high openness to free trade, it is now openly acknowledged that the Union has become particularly exposed to risks.

3. Strategic Dependence

The pandemic exposed the EU’s high dependence on Chinese suppliers, especially in areas like medical equipment and raw materials. Over 90% of medical masks, for instance, were imported from China at the time. Additionally, China is the largest individual processor of nickel, copper, lithium, and cobalt, covering between 35% and 70% of total global processing of these raw materials. Simultaneously, Chinese export restrictions increased ninefold between 2009 and 2020. Despite such data, little progress has been made at the Union level in terms of diversification. Consequently, competitiveness has become a new key term in the EU’s vocabulary, one that will decisively shape all its policies during this mandate.

4. Political Tensions

Political concerns began to surface with the launch of the Belt and Road Initiative (BRI) in 2012. In this context, although many Eastern and Southern European countries initially viewed the initiative optimistically and without deeper strategic assessment, it became increasingly clear over time that BRI is not merely an economic platform, but also a tool of Chinese political influence and soft power expansion. Today, for instance, the 16+1 mechanism is practically dysfunctional. Already in 2021, the China–EU Comprehensive Agreement on Investment (CAI) was frozen due to accusations of human rights violations in Xinjiang and Hong Kong. Finally, China’s decision to elevate its relationship with Russia to the highest level since the start of the war in Ukraine further convinced the Union of China’s resolve and readiness to confront EU interests.

What Will De–risking Entail?

Ursula von der Leyen popularised the concept of de–risking in 2023. The starting point is that despite all differences, there is no political or economic benefit for the EU to sever its ties with China. At the same time, it is recognised that something must be done to address China’s rise, particularly as its increasingly assertive approach is visible both politically and economically on the international stage. Thus emerges the de–risking strategy—at a time when China is increasingly viewed as a rival and less as a partner. In other words, China has been and will remain an irreplaceable trade partner for the EU—but this does not mean that the EU cannot take steps to mitigate the risks posed by that very irreplaceability. With the goal of rebalancing the relationship, the EU will pursue the following long-term objectives:

1. Strengthening Competitiveness and Economic Resilience

The first step in the de–risking strategy is to strengthen the competitiveness and resilience of the EU economy itself—especially in the sectors of healthcare, digitalisation, and clean technology. According to their estimates, the green tech market will triple by 2030, and the Union’s economic trajectory will depend on its ability to lead in this area. Through the Net-Zero Industry Act, the Union aims to ensure that at least 40% of the required green technologies for the transition are produced within the EU—including solar and wind energy (onshore and offshore), energy storage systems, batteries, etc. However, to achieve this, the EU will also strive to reduce its dependence on external supplies of key raw materials.

2. More Effective Use of Existing Trade Instruments

The second step is to more decisively and effectively use the trade and security tools already available to the EU. In recent years, mechanisms have been developed to protect the market from unfair competition and security risks—such as foreign investment screening, export controls and other instruments to deter economic coercion. However, for effective implementation, the EU will face the need for faster decision-making. This is particularly challenging, given that China, unlike the EU, has only one decision-making centre.

3. Developing New Safeguards for Sensitive Sectors

The third element of the strategy involves developing new, targeted protection mechanisms, especially in highly sensitive and strategic technology sectors. In the era of rapid development in artificial intelligence, quantum technology, microelectronics, and biotechnology, the EU will be expected to move beyond its traditional comfort zone. When the Union was formed or last revised its treaties in 2009, many of today’s challenges were not even foreseeable. Therefore, new approaches will be considered to navigate global developments, potentially including a redefinition of the Union itself.

4. Partnerships and Global Diversification

Finally, the fourth step involves strengthening cooperation with international partners—especially those from the G7, G20, Indo-Pacific, and other regions that share Europe’s concern for economic security. Through new trade agreements with countries like Australia, India, and ASEAN nations, and by modernising existing deals with Mexico and Chile, the aim is to significantly diversify trade relations. Now that the global order is being redefined through US tariffs, the EU will strive more than ever to preserve its position built on international partnerships rooted in free trade. All of this should contribute to more resilient supply chains and stronger resistance to external shocks.

How Does Serbia Fit In?

Serbia holds particular significance for the EU—not only because it is the largest economy in the Western Balkans, but also due to its ability to attract the attention of external actors such as China.  It stands out for hosting President Xi Jinping twice, and for its free trade deal, visa liberalisation, and enhanced comprehensive strategic partnership with China. Although the EU remains Serbia’s most important trade partner, the political and economic closeness between Belgrade and Beijing has not gone unnoticed by the EU institutions and certainly raises concerns. The perceived absence of EU-backed conditions—such as rule of law and transparency—in many areas of cooperation with China makes its offer more appealing to segments of the political elite, potentially paving the way for corrosive effects.

As the de–risking strategy becomes more clearly articulated, the EU has an opportunity in the coming period to intensify efforts to offer a sustainable alternative to China’s presence in Serbia. Grounded in gradual integration, the EU can engage—even before full membership is achieved—through increased financial assistance, a more strategic approach to infrastructure development, and deeper institutional cooperation. Nevertheless, the fact that Serbia is facing growing civic demands for transparency, accountability, and rule of law raises the question of how to align the strategic imperative for de–risking with a principled approach to enlargement. Therefore, the way the EU implements this strategy in its immediate courtyard—without compromising its own values—will be a measure of its ability to effectively tackle modern challenges.

Originally published on EUpravozato.