EU must seek to de-risk rather than decouple from China, says von der Leyen

European Commission President Ursula von der Leyen (File image)

The European Union needs to work and trade with China on clean tech and push for a level playing field rather than seek to decouple from the world's second-largest economy, European Commission President Ursula von der Leyen said on Tuesday.

Von der Leyen said in a speech at the World Economic Forum (WEF) annual meeting in Davos that China had made boosting clean tech innovation and manufacturing a key priority in its five-year plan, dominating in sectors such as electric vehicles and solar panels.

"But competition on net-zero must be based on a level-playing field," she said, adding China had been encouraging energy-intensive companies to relocate to China with promises of cheap energy, low labour cost and lenient regulation.

China, she said, heavily subsidises its industry and restricts access to its market for EU companies.

"We will still need to work and trade with China, especially when it comes to this transition. So we need to focus on de-risking rather than decoupling," she said.

This meant using the EU's trade and domestic defence tools, such as the recently implemented foreign subsidies regulation.

"We will not hesitate to open investigations if we consider that our procurement or other markets are being distorted by such subsidies," she said.