The European Union’s reliance on China for vital raw materials has led a prominent German industrialist, Stefan Scherer, to suggest that the EU might as well consider becoming a province of China. Scherer, the CEO of AMG Lithium, Europe’s first lithium hydroxide factory for car batteries, warns that without strong action, China will maintain its dominance in battery technology and continue to undercut EU competitors due to the availability of cheaper components.
Schantzinger emphasizes that Europe’s dependency on China for lithium and other critical materials threatens the EU’s climate objectives and the competitiveness of its industries. Speaking at the AMG Lithium plant in Bitterfeld-Wolfen, former East Germany, Scherer asserts that the EU lacks a comprehensive strategy to reduce this dependency, which has allowed China, with its head start and extensive investments in the sector, to control a significant share of the global market for lithium refining and battery component manufacturing.
Scherer points out that the EU’s Critical Raw Materials Act doesn’t offer adequate mechanisms to encourage local mining and processing of critical materials, unlike US policies that require a certain percentage of strategic materials to be produced domestically. These US measures give a clear advantage to local manufacturers and encourage investment in American soil.
While Scherer is confident in AMG Lithium’s potential for success, he is less optimistic about Europe’s capacity to become less reliant on China. He suggests that temporary protections and incentives could help level the playing field, allowing European producers to grow and become more competitive. These measures include tariffs, tax breaks, and possibly opening up to Chinese investment in Europe on the condition that it stimulates European employment and supports technological development.
Scherer is also critical of the energy prices in Germany, which are significantly higher than the EU average and present a major obstacle for the country’s industries, including automotive and steel sectors. He proposes a multifaceted approach combining short-term tariffs with invitations for Chinese investment to create a sustainable and competitive environment for European industries, especially in strategic sectors that are transitioning to new technologies.
Source: https://www.theguardian.com/business/2025/jul/02/eu-may-as-well-be-province-of-china-due-to-reliance-on-imports-says-industrialist
