LONDON -- European Commission President Ursula von der Leyen said on Friday that the bloc will seek to implement a new trade diversification measure as soon as December to redress a gaping trade imbalance that has given China dominance over many of their manufacturing sectors.

"We will present what we call Diversify EU," she said at a media briefing after a two-day meeting of the leaders of the European Union's 27 members. "This instrument will be country agnostic, and it will mean faster de-risking by companies. We will also propose a solidarity mechanism. It will set out what we can do when one of us is subject to coercion or retaliation." The diversification tool is part of the trade toolbox that the European Commission -- the European Union's executive arm -- can deploy against what it sees as unfair trade practices that disadvantage its industries.

This measure would require businesses in critical sectors to source essential inputs from at least three suppliers. The EU has said that its top priorities are the chemicals and machinery sectors, after it clinched a deal last week to limit imports of China-made hybrid cars.

A spokesperson at Solvay, a major Belgian-French multinational chemical producer, welcomed the moves to protect the industry.

"Structural, state-induced oversupply, above all from China, is hitting European producers hard," said the spokesperson. "Since 2022, Europe has announced the closure of almost 10% of its chemical capacity." But the person also cited the complexities of the industry, saying that "chemicals are not cars ... any measure must be designed product by product, based on evidence and with the impact on downstream users in mind. A negotiated quota must not simply lock in today's import levels."

Cars have been in focus among European leaders. France and Germany are also pushing to exempt Britain from "Made-in-Europe" local-content measures if the former EU member aligns with the bloc's automotive sector rules. If their plan gains approval within the bloc, it would mean the U.K. adopting the EU's punitive tariff regime on Chinese-made electric vehicles. Britain is one of the top importers of Chinese EVs and is BYD's biggest market outside of China.

European Commissioner for Trade Maros Sefcovic met Chinese Commerce Minister Wang Wentao in Beijing last week for talks that resulted in an agreement to limit Chinese exports of hybrid vehicles to 350,000 to the bloc from next year, with a 6% rise annually after that. Chinese carmakers had pivoted to manufacturing hybrids after the EU imposed import duties on their EVs two years ago.

Those talks were largely viewed positively, as both sides were seen to be keen to compromise and avert escalation The EU says its trade deficit with China of around 1 billion euros ($1.2 billion) a day is unsustainable while Beijing needs the European market to absorb its products in the face of slower domestic growth and U.S. import tariffs.

Japanese and South Korean carmakers have voiced worries that any protective measures applied in the automotive industry could hurt them, particularly in view of "country-agnostic" rules.

"Japanese carmakers could face collateral damage even if China is the intended target," said Jonathan Goffioul, an EU policy analyst at Japanese law firm Nishimura & Asahi in Brussels.

He said the industry needed more clarity from Brussels about its quota allocation and treatment of trade partners.

"The EU already has rules to prevent circumvention through third country processing, but whether additional origin verification or anti-circumvention requirements will be introduced remains unclear," Goffioul said. "These could create more compliance burdens for Japanese manufacturers with complex supply chains." Another lawyer said Chinese carmakers have already made strides in investing in European production, which means that legislating against them will have to evolve from import barriers.

"Regulatory scrutiny is likely to shift towards issues such as foreign subsidies, rules of origin, local content requirements, supply chain localization and technology transfer," said Renato Antonini, managing partner of Hogan Lovells Cadwalader's Brussels office. "The key question may soon ... become whether the EU's legal and regulatory framework will allow those investments to proceed on commercially viable terms." China's global exports surged 36.3% year-on-year in September, customs data from China showed this week. Its trade surplus with the EU widened to $34.8 billion in the month, from $22.9 billion a year ago.

In a keynote speech at the Canton Fair on Thursday, Chinese Premier Li Qiang referred to "quite some discussions about the issue of trade balance globally," which he said were rooted in protectionism.

Without mentioning any country, he said, "One cannot simply view surplus as 'taking advantage' and deficit as 'being ripped off' ... It is simply unrealistic to impose export control on others while looking for balanced trade at the same time. Such a practice will only push up costs, disrupt industrial and supply chains, and further aggravate the imbalance." While much attention has centered on the EU's action on trade, the council's main topic of discussion is its next seven-year budget that will include aid to Ukraine, with the view of concluding a deal soon.

There are worries that a presidential election in France next April could usher in right-wing, pro-Russia populist Marine Le Pen. The euroskeptic has also threatened to cut EU contributions, which would be a blow as France has the second-largest economy in the bloc.

European Council President Antonio Costa, from left, Ukrainian President Volodymyr Zelenskyy and European Commission President Ursula von der Leyen in Brussels on Oct. 16.

Ukrainian President Volodymyr Zelenskyy arrived in Brussels on Thursday and held bilateral talks. On Friday, he appeared at a joint press briefing with European Council President Antonio Costa and the European Commission's von der Leyen.

Both European leaders pledged unwavering support for Ukraine, which has struggled with disruptions to the Starlink internet connection that its drones rely on to strike Russian targets. Russian attacks on its energy infrastructure also mean that Ukrainians are facing a harsh winter.

These meetings are happening against a backdrop of heightened tensions on the continent. Countries have been reporting hybrid attacks allegedly linked to Russia, including the discovery of an explosive-packed drone at Germany's Leipzig/Halle airport recently.

Drone incursions of European airspace have also become a regular problem while attacks on merchant ships in the Black Sea are hitting Ukrainian grain shipments, including to Asia. Clement Ngu is a contributing writer.