New Delhi, June 21 (AHN) European Commission President Ursula von der Leyen has said that the European Commission will develop new tools to counter macroeconomic imbalances, most notably the “growing and unsustainable" trade deficit with China, according to a report.

Von der Leyen said the diversification instrument would be country-agnostic, focusing on helping European companies in specific sectors de-risk faster, as supply chain diversification has so far been too slow, according to Euronews.

"Europe has already built an extensive toolbox in recent years. Now we must use it more proactively and more strategically to defend our European interests," she said at a press conference closing this week's European Council summit.

According to media reports, the idea would be to require companies to diversify the supply of critical components from one or two countries to avoid critical chokepoints that can be weaponised.

Von der Leyen said EU leaders showed unity and clear support for a European response to the current situation, while also stressing that dialogue with China remains crucial.

At the same press conference, European Council President António Costa emphasised that the status quo cannot continue.

"Our strategy is clear: de-risking, not decoupling, while we engage in dialogue," he said. "But we need to address the challenges we are facing. A €1 billion trade deficit per day is simply unsustainable. We cannot continue to raise these issues without any concrete results."

Not all member states favour a more aggressive trade policy toward Beijing, which has already threatened retaliation. Germany is heavily dependent on exports to China, while Spain has positioned itself as Europe's hub for Chinese investment; both are generally wary of provoking Beijing.

Senior diplomats are reported to have stressed the importance of keeping dialogue with China open, as commercial relations may become even more important given the erratic behaviour of the US government and its assertive trade agenda.

However, France has led calls for stronger tools to contain China's overcapacity and market-distorting subsidies, and suggested the leaders' summit shows Brussels is taking a harder line on Beijing, the report added.