On December 9, 2025, an unmanned truck transports containers at the Dapukou Container Terminal in Zhoushan Port, Ningbo City, Zhejiang Province, China.
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BEIJING — Supply chain diversification away from China is moving from mere talk to action.
Jens Eskelund, president of China’s European Union Chamber of Commerce, told reporters on Tuesday ahead of the release of a report on supply chain risks and as businesses look ahead to the new year after a tumultuous 2025.
“Addiction is being discussed in much more detail than before… Are we even sure that Europe can make toothpaste without raw materials sourced from China?” Eskeland said.
China’s trade surplus reached a record $1 trillion in the year to November, reflecting continued global demand, according to official figures released on Monday. This means that despite the US tariffs, the country exported far more than it imported.
“The more production increases, the greater the risk that countries will start to react,” Eskelund said. He pointed out that China was subject to a record 198 World Trade Organization trade investigations last year, with far more than half of them coming from developing countries.
Other figures cited by the EU Chamber of Commerce in a report on Wednesday show that China’s share of containers shipped around the world is gradually rising, to 37% in the first three quarters of this year, up from 36% at the end of 2024 and 31.7% in 2019 before the pandemic.
The chamber said a weak Chinese currency and domestic overcapacity contributed to this growth. It advised member states to “eliminate single-source dependencies” on the United States and China and called on EU policymakers to “accelerate plans to identify and eliminate critical dependencies.”
Investors have likely heard this conversation before.
During the Covid-19 outbreak, companies began to realize how dependent they were on Chinese products and components as strict lockdowns to contain the virus disrupted production. Eskellund said the risks for companies and their home governments are now much higher compared to the pandemic.
“This is actually a big change, because you’re primarily concerned about whether you have a supply chain that can physically deliver the product, and you’re concerned about whether that supply chain is dependent on a particular government position,” he said.
This year, amid heightened tensions between the United States and China over tariffs and trade barriers, Beijing tightened export controls, including on critical rare earth metals, highlighting the world’s dependence on Chinese production.
A survey conducted by the American Chamber of Commerce in Shanghai earlier this year found that a record 47% of respondents had diverted investments originally planned for China.
An EU Chamber of Commerce membership survey earlier this year found business confidence had hit an all-time low, with 73% of respondents saying it had become more difficult to do business in the Asian country.
Still, more than a quarter of respondents said they were expanding their domestic footprint within China primarily to meet the Chinese government’s localization requirements, and only 10% were looking to supply chains outside China, but that is now changing.
In November, the chamber conducted a brief survey of its 131 members on the impact of China’s export restrictions and found that about a third of respondents plan to look outside China for supplies and capacity building abroad.
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It is less clear whether diversification means reshoring.
“The reality is that no one is reshoring, it’s all friend-shoring,” said Cameron Johnson, a Shanghai-based senior partner at consulting firm Tidal Wave Solutions. “They’re going to Mexico, they’re going to Southeast Asia.”
“We should expect the Chinese supply chain to become more dominant,” he said, adding that companies will try to better plan their entire supply chain instead of just focusing on one part. It may be Chinese companies that are partnering with or establishing factories in these overseas factories.
The EU trade body said around half of member states reported that China-based suppliers were moving production to other markets.
Eskeland noted that car companies in various countries, including China, have adopted this approach. “Chinese companies may be a little ahead of their own governments here,” he said.
