The European Union has spent three years building a political vocabulary around “de-risking” from China. The surveys are saying something different. A report released Wednesday by the EU Chamber of Commerce in China, drawing on responses from nearly 300 member companies collected between January and February 2026, found that nearly one-third of respondents had onshored further in China over the past two years. Another 37% had not changed their supply chain strategy at all. Only 24% reported pursuing true dual-track diversification – expanding in China while simultaneously establishing a presence elsewhere. The gap between policy language and corporate behavior has rarely been documented this directly.
YourDailyAnalysis breaks down the economic logic behind this divergence – more durable than the de-risking vocabulary suggests. Chinese manufacturing competitiveness has not weakened as European policymakers hoped. It has intensified. Automation is the central explanation. Roland Berger’s March 2026 report, titled “China’s cost and speed advantage: A wake-up call for Western companies,” documented the manufacturing cost gap widening rather than closing, driven by three reinforcing factors: lower industrial energy prices, access to raw materials at negotiated supplier rates, and quarterly price reviews that compress input costs in ways that European procurement cycles cannot match. The EV manufacturer Nio operates a single factory in China with 941 robots working fully autonomously across multiple vehicle models simultaneously with no workers on the production floor. That facility runs around the clock. The capital cost of that automation is offset by the operating structure it enables.
The policy contradiction sits squarely in Brussels. The EU’s RESourceEU initiative targets a 30 to 50% reduction in strategic dependencies by 2029. The European Commission is simultaneously preparing rules that would require companies to source from at least three different suppliers, with limits on single-country concentration. Proposed legislation targets chemicals and industrial machinery. Companies would face sourcing caps per country. The problem is that these rules impose costs that the companies being regulated have already concluded they cannot absorb without losing global competitiveness. The corporate survey responses are, in effect, a pre-compliance statement: the rules may pass but the underlying economics will not change.
There is a third scenario worth considering. YourDailyAnalysis spots it in the 24% dual-expansion figure – a minority today, but one likely to grow as regulatory and geopolitical pressure both intensify. A subset of companies – the 24% pursuing dual expansion – may represent the actual de-risking strategy that is viable. Not exit from China, but China-plus: maintaining a full-scale Chinese base for global competitive pricing while building a parallel, smaller capacity elsewhere for regulatory compliance, tariff management, and supply security. That model satisfies political requirements without sacrificing efficiency. It is also considerably more expensive than either pure China concentration or pure diversification. YourDailyAnalysis identifies this hybrid model as likely to become the dominant template for European industrial companies over the next three to five years, regardless of how the EU regulation is eventually written.
YourDailyAnalysis categorizes that hybrid model as the rational response to a regulatory environment that sets compliance requirements without compensating for the cost. The geopolitical dimension has not been absent from boardrooms. EU-China trade tensions, potential tariff escalation from both Washington and Brussels, and China’s export restrictions on rare earth elements have all registered as risks. But the survey data shows those risks are being managed through operational hedging, not structural exit. What that tells investors, policymakers, and supply chain professionals is that the de-risking agenda will reshape some procurement decisions on the margin while leaving the core manufacturing geography largely intact.
Watch the EU’s formal publication of supply chain diversification rules, expected later in 2026. The gap between the compliance requirements and the corporate behavior captured in this survey will determine whether the rules have real force or become another layer of expensive paperwork. Your Daily Analysis forecasts that enforcement will vary by sector – chemicals and semiconductors face harder pressure than consumer goods – and that practical de-risking will fall well short of the RESourceEU plan’s 30 to 50% target.
