BERLIN - Decoupling from China is not an option for companies in the European Union, EU trade commissioner Valdis Dombrovskis told an engineering conference in Berlin on Tuesday, as the war in Ukraine redefines how the bloc sees its important trade partners.

"The EU should continue engaging with China with pragmatism and without naivety. Our trading relationship needs more balance and reciprocity," he said, calling for more focus on better risk management and diversification instead of pulling away.

Besides China, the EU's relations with its other important trade partner, the United States, have also changed, he said.

"The transatlantic relationship has been reinvigorated," he said, but there are "deep concerns" about the US Inflation Reduction Act and the advantages it affords to American companies.

Mr Dombrovskis argued that the green subsidies provided for in the law discriminate against the EU's automotive, renewables, battery and energy-intensive industries.

The US$430 billion (S$619 billion) climate, health and tax Bill was signed into law in August and has also prompted South Korea to raise concerns about tax credits for electric vehicle purchases.

"I will be raising these issues with my American counterparts when I travel to Washington tomorrow," he said.

German Chancellor Olaf Scholz, speaking at the same conference, said Germany will discuss the act with Washington. REUTERS