Europe and the United States have become significantly more vulnerable to supply disruptions from China in key sectors such as energy, health care, and digital technologies, the European Central Bank said on Tuesday, warning that even small shocks to these “critical dependencies” could have outsized economic costs.
“Although the critical dependencies constitute a minor share of total trade and inputs to production, any disruption to their supply yields disproportionate economic costs owing to their low substitutability,” ECB economists wrote in an abstract to a new bulletin published on Aug. 5.
