"compelling European companies to diversify their supplier base, as it looks to wind down overdependence on the world's second-largest economy in critical sectors" [diversify their supplier base]
The phrase 'compelling European companies' signals a coercive regulatory mechanism—not incentives—to force supply chain restructuring, directly supporting the claim that state-directed diversification mandates are becoming a formal policy instrument.
Reasoning from this article
This mirrors analogous moves in the US (CHIPS Act domestic sourcing requirements) and signals a convergent Western pattern: governments are no longer leaving supply chain geography to market forces in sectors deemed strategically critical. The EU framing of 'overdependence' as a policy problem to be corrected through compulsion generalizes beyond China to any dominant single-source supplier relationship.