Decoupling? "64 Strategic Products Depend on China" Europe | Materials | Strategy
According to the website of the Spanish newspaper Pioneer on July 7th, the European Union has relied on importing hundreds of materials and products in the past and present. According to the latest report from the European Commission's Internal Market, Industry, Entrepreneurship, and Small and Medium Enterprises Directorate General, up to 204 products are defined as "strategic dependencies".
Therefore, although it is summer now, Brussels, like other European capitals, is sweating a cold sweat. Because, as the chief economist of the aforementioned institution, Roman Ahona, said, without these strategic products, Europe "would be difficult to operate". In addition to well-known energy sources such as coal, petroleum coke, or rare earths, there are also little-known energy sources that are crucial for transportation, communication, and energy transformation that should be given attention.
Ahona stated that this is a problem for the entire EU economy, as they specifically demonstrate that "the EU's foreign products are too concentrated, and the possibility of replacing these key industry products with domestic production is very low.".
Container ships docked at Hamburg Port, Germany
43% of the 204 products are chemical products, especially silicon and rare earths, which are the core of new technologies and renewable energy; 14% are mechanical and electrical equipment; 12% are base metals and their derivatives; 11% are mineral products, such as natural borate and its concentrate or molybdenum and its concentrate. Among the top five are medical and precision instruments, such as scintillation scanning devices for scanning patients and instruments for aerospace navigation, accounting for 6% of the 204 materials and products.
The remaining 14% of "strategic dependent products" include textiles, plastic and rubber products or transportation materials, gemstones or semi gemstones, finished products, and plant products.
Therefore, the latest report attempts to "illuminate the dark areas" and hopes to avoid the recurrence of the situation of ventilators during the COVID-19 epidemic. In addition, the report points out that the EU not only continues to rely heavily on importing hundreds of strategic products, but also on very specific and limited markets, especially from China. Of course, there are also markets from the United States, Russia, Switzerland, the United Kingdom, and India that compete with the European Union in the new world chaos.
From the perspective of source countries, out of the 204 materials and products that Europe relies on, 64 are from China, 38 are from the United States, 15 are from Russia, 12 are from Switzerland, and 10 are from the United Kingdom.
Ahona said that out of the 64 materials and products that Europe relies on importing from China, 45 are extremely critical, meaning that without importing from China, they cannot be obtained.
Solution? "A better understanding of what has happened and efforts to continue working with international partners to diversify supply, whether in Canada or Africa," said Ahona. "We also need to mobilize existing tools and integrate them into regulatory, financial, and human resources, ensuring access to key raw materials." However, Ahona insists that Europe's strategy is "not decoupling from China, but reducing risk levels. Decoupling is meaningless. China is a huge market and it is constantly evolving.".
He stated that in the field of advanced manufacturing, the EU has performed well with over 30% of patents. On the other hand, in terms of chips, semiconductors, cloud technology or solar energy technology, as the "organization mode of the value chain" depends on Chinese Mainland and Taiwan, the EU is still lacking.
However, the dilemma is that, as the renowned economist Blanco Milanovich explained to The Pioneer this year, once "globalization ends", Europeans today may lose laptops, photovoltaic cells, or basic medical and pharmaceutical resources in the short term.
