The European Union has unveiled plans to cut China’s dominance of its critical supply lines, with officials warning that the clock is ticking for Europe to kick-start its industries of the future. Chinese firms could see their exports to the EU slashed under proposed procurement rules that would put the squeeze on clean-tech providers from countries commanding market shares of greater than 65 per cent. For critical minerals like rare earths , lithium and magnesium – which are utterly dominated by China – the EU would avoid being reliant on any third country for more than 70 per cent of its supply. “We now understand that the strategic choices China made a decade ago and outcome coming home to roost, and we also have to make our own strategic decisions now for the decades to come,” said Frans Timmermans, the bloc’s climate tsar, in Brussels on Thursday. The European Commission proposed two new laws that would seek to put the turbo-boosters under its own industrial plans. This followed a loosening of state-aid rules last week that will allow Brussels to roll out subsidies to fund its digital and green transitions. Under the Net-Zero Industry Act, Brussels will scale up manufacturing of clean technologies in the EU and seek to wrest back control of industries like advanced batteries, wind, and solar power equipment that China has led in recent years. In the future, firms from countries that have more than 65 per cent of the market share for “specific net-zero technology” would be penalised during procurement processes. This means Chinese firms would likely lose out on lucrative European solar tenders, as the country provides more than 90 per cent of the bloc’s solar photovoltaic wafers. US, EU claim progress against China reliance via ‘critical raw materials club’ Timmermans said the EU would not try to compete with Chinese manufacturers of cheap solar panels, but rather focus on advanced solar equipment. “We insist on solar but specifically on the newest innovations in solar and on new applications for solar, which are very exciting,” he said in response to a question from the Post. Timmermans noted that many European citizens in recent years had invested in solar panels. “It’s also because they were cheap to buy,” he said. “We don’t want to have this transition slow down because we create difficulties that would increase [their] prices.” Yet the EU’s climate chief wanted the bloc to avoid repeating “the mistake of creating a new sector and then letting another country profit from all the benefits of that new sector”. The other bill, the Critical Raw Materials Act, will look to process 40 per cent of the strategic raw materials the EU uses by 2030. It also aims to ensure the EU will not rely on third countries for more than 70 per cent of critical minerals. In the European Parliament on Wednesday, Ursula von der Leyen, the commission’s president, laid out the rationale for diversifying away from Beijing. “We get 98 per cent of our rare earths from China, 93 per cent of our magnesium from China, 97 per cent of our lithium from China … the pandemic and war have taught us a bitter lesson about our dependencies,” she said. The lists of minerals include cobalt and lithium used in advanced batteries, scandium and vanadium used in aerospace equipment and weaponry, and gallium and germanium that are used to make semiconductors . China’s semiconductor output shrinks 17 per cent in first 2 months of 2023 As well as having abundant domestic supplies for some materials, Beijing has become a top exporter of processed minerals, hoovering up mines that churn out critical metals like lithium and cobalt across Africa, Australia and Latin America. Brussels is seeking to compete with China for these resources by signing or upgrading trade deals with resource-rich countries like Australia, Thailand and Chile. Asked why countries would prefer to partner with the EU rather than China on such industries, Thierry Breton, the bloc’s single market chief, said it would bring a “new type of partnership” that would ensure minerals are extracted sustainably. Breton said the leaders of some African nations, including the Democratic Republic of Congo and Namibia, had complained about how previous collaborations had worked – intimating displeasure with China. “Resources are a great opportunity, but also a source of pain if extracted in a brutal way for partners who don’t take the environment into account, or neighbours who want to steal them,” he said. EU strikes deal with Chile in bid to beat China to vast lithium reserves Analysts said the EU’s “double act” on minerals and clean tech conveyed a message to Beijing. “This ‘double act’ is the EU’s way of saying to China that they are also in the race for clean tech, and while they will not use full protectionist measures to win it, they will throw everything else they’ve got at it,” said Ignacio Arroniz, a climate researcher in consultancy E3G’s Brussels office. “The EU needs to walk a fine line, however, since there’s a risk of backlash from developing countries, who will not like the acts’ undertones on defending EU competitiveness and onshoring clean-tech value chains,” he added. A spokesman for the Chinese mission to the EU told the Post that “arbitrarily placing curbs and other actions that violate the law of the market economy will disrupt international cooperation, destabilise industry and supply chains”. The EU and China were “symbiotic” and “complementary” economies, he said. “Such dependency is not dangerous in itself, but rather it is dangerous to exaggerate it or even to politicise and weaponise it,” he added.