Belgium’s increasing trade dependency on China calls for vigilance
Imports from China are reaching new heights in Europe, boosted by Chinese overproduction in several sectors and aggressive industrial policy. Belgium is no stranger to this trend. This situation raises concerns about excessive dependency on China as a key supplier of strategic goods, meaning those deemed important for national security, health, energy, and the green and digital transitions. In response, Europe is attempting to manage its trade relations with China under the Commission’s mantra of “de-risking, not decoupling”. Belgian policymakers endorse this new approach, but action on the ground is hindered by the fragmentation of powers within the country.
Identifying Belgium’s vulnerabilities in terms of trade dependencies
To inform the public debate, this article maps Belgium’s key trade exposures to China and the associated vulnerabilities. Belgian direct import and export exposure to China is – in relative terms − lower than the EU’s and Germany’s in particular. However, the composition of Belgian imports from China has evolved in recent years, away from textiles and toys towards more sophisticated goods such as electronics and electric vehicles. On the exports side, the growing share of chemicals in Belgian exports to China is noteworthy. A systematic product-level analysis reveals that while China is the main extra-EU supplier of strategic goods to the EU by far, this is not the case for Belgium. Nonetheless, Belgium is strongly dependent on China for some 50 out of 200 strategic imports – ranging from vitamins and industrial precursors to steel bars, LED lamps and permanent magnets. On the other hand, most of Belgium’s exports for which extra-EU demand is highly concentrated tend to go elsewhere, notably the UK, the US and India, with some exceptions for certain goods such as chemical catalysts.
We look beyond Belgium’s direct trade with China at the macroeconomic level to detect other pockets of vulnerability. The value-added data indicate that Belgian sectors like textile manufacturing, electronics and base metals are indirectly exposed to China through international supply chains. Due to the presence of many multinationals in Belgium and in the broader context of the single market, trade flows between other EU Member States and China are relevant for Belgium, too. In addition, more detailed firm-level analysis reveals that exposure to potential disruptions in the supply of critical Chinese inputs varies enormously − across geographic regions, (sub)sectors and individual firms within the same sector − suggesting the need for well‑targeted de-risking measures.
Monitoring changes in Belgium’s trade relations with China and relevant EU policies
In any case, Belgian policymakers and firms will increasingly face the consequences of Europe’s strategy for de-risking from China, ranging from punitive import tariffs and (possibly) export controls, more burdensome investment screening procedures and reporting duties to spillovers from EU-level and Member State industrial policies aimed at counteracting Chinese dominance in various supply chains. Continued monitoring of Belgium’s evolving trade exposure to China and of the relevant EU policies therefore remains crucial.