With the end of the year approaching, the European Commission is rapidly ramping up its de-risking efforts through a flurry of broadsides against Chinese firms – even as the bloc’s most powerful member states appear to be moving in different directions on China.
Foreign subsidy regulation probes were launched against online retailer Temu and Nuctech, a maker of airport scanning equipment, on Wednesday and Thursday respectively.
E-commerce giant Temu saw its Dublin headquarters raided by investigators looking for evidence of subsidies that distort the EU’s single market. This mirrored the commission’s dramatic raid of Nuctech’s EU offices last year. On Thursday, the commission announced it had deepened its probe into Nuctech.
Early Thursday morning, meanwhile, negotiators from the European Council – made up of the 27 member states – and the European Parliament agreed on new rules that will make it mandatory to screen inbound investments in dual-use or military sectors.
While China is not named in the legislation, its hoovering up of important European assets inspired the original screening laws.
The upgraded rules – to kick in after 18 months – will now make it compulsory to screen foreign bids for firms making sensitive technology such as AI, quantum computing and semiconductors, or in the critical raw materials and infrastructure spaces. Bids emanating from local subsidiaries of foreign buyers will also be reviewed.
The moves follow last week’s blitz of proposals aimed at bolstering the bloc’s economic security chops and turbo-boosting its decoupling from China’s dominance of the rare earth and other critical minerals supply chains.
The pace of anti-dumping probes is also picking up towards year-end, as trade officials work to clear a long backlog of complaints that has left them thinly spread. Recently launched investigations into robot lawnmowers, welding wire and thermal paper may not be the last of 2025.
“Threat detection systems, including security and inspection scanners used at ports and airports, play an essential role in ensuring that Europe is open, yet secure,” said the EU’s competition chief, Teresa Ribera, of the probe into Nuctech.
The in-depth probe into the security scanning firm once run by former Chinese President Hu Jintao’s son builds on preliminary investigations conducted last year.
These were launched with spectacular dawn raids of Nuctech’s Dutch and Polish premises. The company subsequently sued the commission for reputational damages, but the case was thrown out by the EU’s General Court.
But while Brussels is on a determined and predictable path, the direction of some of the EU’s most prominent member states is less clear.
France has been a strong proponent of a muscular EU trade policy towards China, with President Emmanuel Macron warning US-style tariffs could be on the way upon returning from Beijing last week.
“I told them that if they do not react, we Europeans will be forced, in the next several months, to take strong measures and to de-cooperate, following the example of the United States – for instance, by imposing tariffs on Chinese products,” Macron told Les Echos, a daily newspaper.
The sentiment was not shared, however, by German Foreign Minister Johann Wadephul who went to China this week and cautioned against tariffs.
“I would say that such measures should only be considered as a last resort and we should be extremely cautious ... because once you get into such a cycle, there is usually a ping-pong effect or a spiral with further counter-reactions and this only harms free trade,” Wadephul said.
The polarity between the EU’s two most powerful member states is deepening the incoherence of its China strategy, away from Brussels’ preferred hard line.
“It is no longer a ‘Franco-German axis’, certainly not on China, and it has not been for a while,” said Alicia Garcia-Herrero, Asia-Pacific economist at Natixis.
“The irony is that Germany has much more to lose from not realising what is happening. The China shock is much more about Germany than any other European economy. Is it blindness or vested interest of a few large German companies?”
The decision of state-owned railway company Deutsche Bahn to award a contract for 700 electric buses to BYD, even though Germany is home to Europe’s most important automotive sector, has caused furious blowback from trade unions concerned about job losses.
“The federal government owns the railway. We expect it not only to make demands but to be serious about fighting for German jobs,” Martin Burkert, chair of the Railway and Transport Union, told Spiegel, a German magazine.
European infighting resulted in the postponement of the presentation of the Industrial Accelerator Act, which was due to have been proposed on Wednesday. The act would have codified provisions to encourage companies to buy and produce in Europe in the face of rampant competition from China and the United States.
Politico reported that nine member states – the Czech Republic, Estonia, Finland, Ireland, Latvia, Malta, Portugal, Slovakia and Sweden – worried that the protectionist shift would end up doing more harm than good.
Europe’s sluggish response to the manifold industrial threats it faces was laid bare in an interview that industry chief Stephane Sejourne gave to NRC, a Dutch newspaper, this week.
“Last month, I was supposed to go to Brazil to discuss a rare earth mine. Three days beforehand we were told that the Americans had come, put money on the table, and bought all production until 2030,” the French commissioner told NRC.
“We knew they were working on it, but we assumed there wouldn’t be any funding available due to the shutdown. They had already factored that in; the money had already been reserved.” -- SOUTH CHINA MORNING POST
