A leading European business association in China has urged Brussels to avoid becoming a “passive recipient” of US-China trade negotiations, as European firms scramble to navigate Beijing’s export controls.
In a report released on Tuesday, the European Union Chamber of Commerce in China asserted that the EU must take the lead in discussions affecting its interests, while urging Beijing to avoid a one-size-fits-all approach to export controls.
“We’re in a situation where Europe simply cannot wait,” said Jens Eskelund, the chamber’s president, at an earlier media briefing. “It’s regrettable that European companies, time and again, have become collateral damage to something that is not [triggered by] our own countries.”
According to the report, many European companies suffered “significant operational and financial damage” while trying to navigate Beijing’s export controls on rare earths introduced last April in response to US President Donald Trump’s “Liberation Day” tariffs.
Rare earths are a group of 17 elements vital for technologies ranging from smartphones and electric vehicles to weapons and spacecraft.
The chamber noted that export controls have become a defining feature of the US-China trade war, with Beijing’s moves appearing to have been effective in forcing Washington to the negotiating table.
But Beijing’s measures – sometimes broader in scope than international equivalents – are applied globally, subjecting all trading partners to the same sweeping restrictions.
Following a meeting between Trump and President Xi Jinping, Beijing suspended its sweeping October rare earth export controls, putting a one-year pause on measures that for the first time included extraterritorial provisions.
This means that, after the suspension expires in November, firms may require Beijing’s approval to ship products containing Chinese inputs to third countries, even if they are manufactured outside China.
According to the chamber, these extraterritorial provisions represent the most serious risk to EU companies, many of which find it impossible to prepare for their roll-out without further clarity on how the rules will be applied.
“What we’re looking for right now is some sort of guidance on where this is going,” Eskelund said, adding that businesses require visibility beyond the November deadline. “I think this is part and parcel of China’s present effort of trying to convince the world that China is a stable, reliable and predictable partner for international business.”
A series of European leaders have been visiting China since late last year – including French President Emmanuel Macron, UK Prime Minister Keir Starmer and German Chancellor Friedrich Merz – as the continent seeks to stabilise trade ties and assert its own economic interests amid volatile US-China relations.
Beijing has begun granting general licences with lengthier terms for exports of rare earth elements, including to European companies. But the licensing process is often slow, uncoordinated and opaque, the report noted.
It added that the detailed technical information required for applications enables Beijing to map global critical dependencies down to the geographic, company, product and component levels.
The chamber warned that China’s grip on critical supply chains and its willingness to leverage it over strategic materials pose fundamental economic and security risks to Europe that may damage trade between the two or trigger proportionate countermeasures from the EU.
While Eskelund agreed that China was right to point fingers at other nations for first weaponising export controls, he maintained that this did not justify Beijing following suit.
“Two wrongs don’t make a right,” he said. “And of course, the same message goes to Europe. We don’t want to race to the bottom.” -- SOUTH CHINA MORNING POST
