LISBON (Reuters) – Rebuilding European industry and making it less reliant on China and other nations should be a priority after the coronavirus pandemic but the EU should avoid protectionist policies, Portugal’s prime minister said on Monday.

The pandemic has exposed how dependent the European Union has become on China and other countries for essential goods and this makes supply chains more vulnerable to the risk of disruption, Antonio Costa said.

“Europe cannot be totally dependent on essential goods produced outside,” Costa said during an event to outline the main priorities of Portugal’s six-month EU presidency, which starts on Jan. 1. “This is something the COVID-19 crisis has clearly turned into a priority.”

But Costa also warned against a “protectionist vision of Europe or a rupture of global trade” and said it was not a question of creating a few big dominant firms but of devising a “more agile competition policy”.

Part of the strategy should be to develop networks of different firms working on a European scale, he said, adding that the EU could only benefit from decentralising innovation and production chains.

A new European Central Bank report on Monday showed that euro zone firms are increasingly vulnerable amid a pandemic-induced recession, though public support, including cheap ECB cash, have so far limited the damage.