The European Union (EU) has placed the concept of de-risking at the center of its strategic doctrine in its external economic relations since 2023. This concept refers to reducing unilateral dependencies on competitors within the system from a Chinese perspective, diversifying supply chains, and strengthening strategic autonomy, rather than a classic decoupling.[i] The RESourcEU Plan, announced by the President of the European Commission, Ursula von der Leyen, on December 3, 2025, aims to reduce dependence on China in the field of critical minerals and rare earth elements from 65% to below 30% by 2030 as a concrete outcome of the aforementioned doctrine.[ii]
The plan is fundamentally based on the following:
- Funding worth €15 billion will be provided for new mining projects within the EU borders covering the period of 2026-2030. The projects also include joint stockpiling mechanisms for urgent projects, including defense programs.
- Agreement has been reached on deepening relations with Australia, Canada, Chile, Namibia, and Argentina regarding the supply of critical raw materials. For example, investment will be provided to third countries through the Global Gateway initiative.
- The recycling rate will be increased from 25% to 45%. This development will accelerate the goals of the 2024 Critical Raw Materials Act.[iii]
- A phased additional customs duty of 15-25% will be imposed on imports of processed rare earth elements originating from China starting in 2027.[iv]
The EU’s action plan will be implemented in an area where China directly controls 87% of the global rare earth element capacity and 92% of magnetic material production.[v] This is defined as the EU’s most critical risk area. Throughout the year 2025, China’s restrictions on rare earth exports have triggered price fluctuations. As a natural consequence, this carries the potential to increase wind turbine and electric vehicle production costs in the EU by 20-30%.[vi]
China’s range of economic retaliation tools has the potential to exert significant and multifaceted pressure on the EU economy, particularly during times of geopolitical tension. One of the most critical retaliation options is the reintroduction of export quotas on rare earth elements. The quota mechanism could increase wind turbine production costs in the EU by an estimated 35-45% and electric vehicle battery production costs by 28%, seriously jeopardizing the EU’s Green Deal targets in terms of costs and timelines.[vii]
A second retaliatory strategy involves initiating security investigations targeting the German automotive sector. China ranks as Germany’s largest export market. Regulatory or security-focused investigations launched by China against this critical sector have the capacity to directly strike one of the pillars of the German economy, thereby debilitating the overall economic stability of the EU. The addition of new restrictions on strategic raw materials such as gallium, germanium, and antimony, which have been subject to export licenses since 2023, will deepen the EU’s technological dependence. The EU’s dependence on China for these three materials is around 80%.[viii]
From the perspective of power transition theory, the EU’s de-risking move can be interpreted as a soft balancing strategy by mid-level actors at a time when hegemonic power is starting to decline and rising powers are challenging it. China is responding to this move with economic coercion tools. The 2025 rare earth restrictions are a concrete manifestation of this coercion, targeting the EU’s supply chains in defense and green technologies. The complex interdependence claimed by liberal theorists has been rendered asymmetrical. EU exports to China in 2024 amounted to €237 billion, while imports reached €548 billion. The trade deficit stood at €311 billion. This asymmetry strengthens China’s hand.[ix]
The EU’s RESourcEU Plan is the most tangible and comprehensive step to date towards reducing dependence on China. The plan represents an effort to ensure the sustainability of the green transition beyond the pursuit of strategic autonomy. However, China’s monopoly over production and refining significantly complicates the achievement of these goals.
In the short term, the likelihood of China retaliating is quite high. The most probable scenario is the application of a lighter version of the model applied to Japan in 2010, involving quotas or delayed licensing for rare earth element exports. Under this scenario, wind turbine and electric vehicle costs in the EU could increase by a range of 25-40%, and Germany’s automotive sector could face an additional 10-15% market share loss risk in the Chinese market.
In the medium term, the EU’s new partnerships with Australia, Canada, and African countries may start to yield results. In particular, the Kvanefjeld project in Greenland and the refining capacity that Australia’s Lynas company has moved outside Malaysia have the potential to create an alternative to China’s monopoly. However, the environmental costs and local resistance to these projects are slowing the process down. The most critical breaking point will be Germany’s stance. If the Scholz government leaves the door open for a pragmatic dialogue with China, it could maintain flexibility in the EU’s de-risking strategy. Otherwise, a severe trade war with Chinese retaliation could become inevitable as of 2026.
Consequently, December 2025 may go down in history as one of the most significant economic turning points of the post-Cold War era. Europe claims that this move does not signify a desire to break ties with China, but rather a willingness to reduce dependency to a sustainable level. China, however, interprets this step as a new containment initiative and reiterates the principle of reciprocity. Negotiations between the two sides throughout 2026 will be decisive in terms of critical raw materials, the pace of global green transformation, and its cost. The success of the soft balancing strategy against China’s economic practices depends on the capacity to rebalance the asymmetric structure of liberal interdependence. If this capacity cannot be established, Europe may remain permanently trapped in a state of geo-economic fragility and be reduced to the position of an actor outside the center of hegemonic competition between major powers.
[i] “EU-China relations: De-risking or de-coupling − the future of the EU strategy towards China”, European Parliament, https://www.europarl.europa.eu/RegData/etudes/STUD/2024/754446/EXPO_STU(2024)754446_EN.pdf, (Access Date: 04.12.2025).
[ii] “EU looks at legally forcing industries to reduce purchases from China”, The Guardian, https://www.theguardian.com/world/2025/dec/03/eu-strategy-raw-materials-rare-earths-supply-chain-resourceeu, (Access Date: 04.12.2025).
[iii] “Critical Raw Materials Act”, Commission Europa, https://single-market-economy.ec.europa.eu/sectors/raw-materials/areas-specific-interest/critical-raw-materials/critical-raw-materials-act_en, (Access Date: 04.12.2025).
[iv] “EU Launches $3.5 Billion Plan to Secure Raw-Material Supply as China Tensions Mount — Update”, MarketScreener, https://www.marketscreener.com/news/eu-launches-3-5-billion-plan-to-secure-raw-material-supply-as-china-tensions-mount-update-ce7d51dede8df72d, (Access Date: 04.12.2025).
[v] “Global Critical Minerals Outlook 2025”, IEA, https://www.iea.org/reports/global-critical-minerals-outlook-2025, (Access Date: 04.12.2025).
[vi] “How China’s 2025 Rare Earth Export Restrictions Impact Global Industries”, Discovery Alert, https://discoveryalert.com.au/chinas-rare-earth-export-restrictions-2025-impacts-trade-directive/, (Access Date: 04.12.2025).
[vii] “China expands rare earths restrictions, targets defense and chips users”, Reuters, https://www.reuters.com/world/china/china-tightens-rare-earth-export-controls-2025-10-09/, (Access Date: 04.12.2025).
[viii] “Europe’s economy is geared towards a disappearing world, says ECB’s Lagarde”, The Guardian, https://www.theguardian.com/business/2025/nov/21/eu-economy-international-trade-reliance-vulnerable-ecb-lagarde, (Access Date: 04.12.2025).
[ix] “China-EU – international trade in goods statistics”, Eurostat, https://ec.europa.eu/eurostat/statistics-explained/index.php?title=China-EU_-_international_trade_in_goods_statistics, (Access Date: 04.12.2025).
