Brussels (The Brussels Morning Newspaper): In its Alma Mater the National Bank of Belgium has cautioned that dependence on other nations for vital imports with China at the forefront is a two edged sword for manufacturing which can lose up to two percent of its value added should there be 50% cut in supply.
In a recent report the National Bank of Belgium (NBB) warned that difficulties in obtaining key foreign imports would have a serious impact on Belgium’s manufacturing industry with knock on effects for the economy as a whole. This group of materials is mainly from outside the EU and cannot be brought into production inside Europe. It includes both high-end technology products and essentials for the green transition. Recent events such as the pandemic in 2020 or Russia’s invasion of Ukraine were reminders that the euro area is lightly armed with suppliers from other countries and completely exposed to foreign influence.
How will Belgium’s manufacturing sector adapt to reduced Chinese imports?
In a survey conducted by the European Central Bank it was shown that 41% of European companies import the important materials they need from China. Of these companies 90 percent expect sourcing alternatives for these materials to be difficult. The European Commission maintains its report by regularly updating the EU list of raw materials which it regards as crucial. This year in May the European Critical Materials Act went into operation. The legislation is seeking to US its raw materials inside the EU as much as ones from a single place. Doing so will allow to have a stable and safe flow of vital raw material needed for EU Industry. If materials from China and other similar countries were cut by 50%, NBB argued then the value that manufacturers add to products would be lost both in international trade competition locally rather than abroad. This impact varied greatly among companies industries, regions and countries. If Belgium gets only half the materials it usually gets from China and other sources then maybe 2% of value added by its manufacturing industry would not be realized.
