According to Reuters, on May 18, a meeting of finance ministers and central bank representatives from the Group of Seven (G7) was held in Paris. The two-day meeting focused on the economic impact of the Middle East conflict and coordinating a position to reduce dependence on China for rare earths and critical mineral resources. The UK’s Financial Times recently reported that the EU is actively drafting new regulations that could require European companies to diversify key component procurement across at least three different suppliers, significantly reducing reliance on China. This move is seen as a strategic measure by the EU to counter Beijing’s export controls and protect its industrial security, while also reflecting the shared concerns of major global economies regarding supply chain security.
According to two informed EU officials, the new rules mainly target a small number of critical industries such as chemicals and industrial machinery. These industries have long complained that a large influx of cheap Chinese imports has severely impacted Europe’s domestic manufacturing sector. The core proposal is to set a cap on purchases from a single supplier, expected to be between 30 and 40 percent. The remaining components must come from at least three different suppliers, and not all from the same country. This aims to prevent European companies from becoming dependent on a single source, especially amid concerns that Beijing may be “weaponizing” key technologies.
EU Trade Commissioner Maroš Šefčovič is a key figure promoting this policy. He hopes it will help address the EU’s massive daily trade deficit with China of about €1 billion and protect European companies from trade shocks. Last year, after Beijing imposed export controls on key components such as rare earth magnets, some European automotive production lines were temporarily halted, highlighting supply chain vulnerabilities. A senior European Commission official stated: “We are gradually becoming dependent on exports from China in many areas. Dependencies come at a cost, and therefore we must redouble our [diversification] efforts.” The official noted that China’s large-scale subsidies for manufacturing pose an urgent threat to the EU’s industrial base, a view also supported by International Monetary Fund (IMF) reports.
To curb the impact of surging Chinese products on European manufacturing, Šefčovič also plans a series of punitive tariffs on Chinese chemical and machinery products. These measures show that the EU is shifting from a reactive stance to a proactive defense strategy, aiming to rebuild industrial resilience.
G7 Paris finance meeting aligned push
According to RFI, as the EU prepares new rules, the G7 finance ministers and central bank representatives met in Paris on May 18, 2026. Reducing dependence on China for rare earths and critical minerals was one of the key topics. Host nation France aimed to demonstrate the value of multilateralism, but amid growing geopolitical divisions, G7 cohesion is being tested.
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French Economy and Finance Minister Roland Lescure told media at the opening of the meeting: “I think today we are going to show that multilateralism is useful and that it works.” With only one month remaining before the G7 Leaders’ Summit, France hopes to encourage frank dialogue among members amid global trade tensions, geopolitical conflicts, and unstable supply chains. Lescure noted that the way the global economy has developed over the past 10 years is clearly not sustainable.
One of the top priorities of the meeting was the Middle East war and the potential economic consequences of Iran blocking the Strait of Hormuz. The Strait of Hormuz is a critical global route for oil and fertilizer transport. Due to the situation, energy and fertilizer prices have recently risen significantly. The IMF projects that global economic growth in 2026 will further slow and inflationary pressure will increase. German Finance Minister Lars Klingbeil stressed the need to do everything possible to end the conflict, restore regional stability, and ensure freedom of navigation through the Strait of Hormuz. France said it has not yet discussed releasing strategic petroleum reserves, but would consider such measures if shipping does not return to normal for an extended period.
Critical minerals become a global focus
The security of critical mineral and rare earth supply chains was another major topic at the G7 meeting. China currently dominates supply chains for key technologies such as electric vehicles, renewable energy, and defense systems. Lescure said the G7 will strengthen coordination, improve market monitoring, anticipate disruptions, and develop alternative supply channels, including supporting multinational joint projects, with the goal that “no country can again monopolize” these critical materials. He emphasized that critical minerals should be treated as a shared strategic issue, similar to how the energy crisis of the 1970s was handled, Reuters reported.
This position closely aligns with the EU’s supply chain diversification plan. Both the EU and G7 recognize that excessive reliance on a single source is not only an economic risk but also a geopolitical vulnerability. The EU’s reference to rare earth magnet export controls is seen as an example of China potentially using supply chains as a “trade weapon,” while the G7 seeks to build a collective defense through multilateral mechanisms.
The meeting also discussed international trade disputes, the impact of U.S. tariff increases, and sanctions on Iran. U.S. Treasury Secretary Scott Bessent said ahead of the meeting that his recent visit to Beijing was “very successful,” but observers noted that tensions between the U.S. and China over Taiwan and trade continue to quietly intensify. Germany reiterated its unwavering support for Ukraine.
Global economic challenges and outlook
In the current international context, EU and G7 actions reflect a broader strategic shift among Western economies: from maximizing globalization benefits toward prioritizing supply chain security and strategic autonomy. China’s role as a global manufacturing powerhouse and dominant player in critical minerals, along with its subsidies and export controls, has become a key driver for risk diversification efforts.
However, this shift also faces challenges. Mandatory supply chain diversification may increase short-term costs for European companies and affect competitiveness. There are also subtle differences within the G7 regarding China policy, especially amid uncertainty in U.S. policy direction. France hopes to ease disagreements through multilateral platforms, but real-world pressures such as the Middle East conflict, inflation, and bond market volatility are testing coordination capacity.
IMF Managing Director Kristalina Georgieva called on all parties upon arriving in Paris to avoid measures that would “make the situation worse.” Bundesbank President Joachim Nagel said governments and policymakers “can do a lot to calm the markets and give them positive momentum.”
Analysts note that if the EU’s new regulations are implemented, they would mark a major milestone in European industrial policy. If G7 outcomes are translated into concrete actions, they could significantly advance diversification of global critical mineral supply chains. Clearly, amid complex geopolitical tensions and structural economic imbalances, major Western economies are accelerating their “de-risking” efforts.
These developments will not only affect European manufacturing and global trade patterns but will also put pressure on China’s export-oriented industries. In the future, supply chain restructuring is expected to become a new battleground in international economic competition.
By Meng Hao, Vision Times
