As the end of the year approaches, the European Commission is rapidly ramping up de-risking efforts with a series of blistering attacks on Chinese companies – even as the bloc’s most powerful members appear to be moving in different directions on China.
Regulatory investigations into foreign subsidies were launched on Wednesday and Thursday respectively into online retailer Temu and airport scanning equipment maker Nuctech.
The Dublin headquarters of e-commerce giant Temu has been raided by investigators looking for evidence of subsidies distorting the EU’s single market. This mirrors the commission’s massive raid on Nuctech’s EU offices last year. On Thursday, the committee announced it was deepening its investigation into Tongfang Weishi.
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Meanwhile, early Thursday morning, negotiators from the 27-member European Council and the European Parliament agreed on new rules that will mandate the review of inbound investments in the dual-use or military sector.
While China is not mentioned in the legislation, its plunder of vital European assets inspired the original censorship law.
The upgraded rules, which will take effect in 18 months, will make it mandatory to screen foreign bids from companies producing sensitive technologies such as artificial intelligence, quantum computing and semiconductors, or critical raw materials and infrastructure. Bids from local subsidiaries of foreign buyers will also be scrutinized.
On December 5, French President Macron (right) and Chinese President Xi Jinping visited the Dujiangyan Irrigation Site in Sichuan Province, China, which was listed as a World Heritage Site by UNESCO. Photo: AFP alt=French President Emmanuel Macron (right) and Chinese President Xi Jinping visit the UNESCO World Heritage Site of Dujiangyan in Sichuan Province, China, on December 5. Photo: AFP>
The moves follow a series of proposals last week aimed at strengthening the EU’s economic security and accelerating its decoupling from China’s dominance of supply chains for rare earths and other critical minerals.
The pace of anti-dumping investigations is also picking up toward the end of the year, as trade officials work to clear a long backlog of complaints that have allowed them to spread far and wide. The recent investigations into robotic lawn mowers, welding wire and thermal paper may not be the last in 2025.
EU competition chief Teresa Ribera said of Nuctech’s investigation: “Threat detection systems, including security and inspection scanners used at ports and airports, play a vital role in keeping Europe open and safe.”
An in-depth investigation into a security scanning company once run by the son of former Chinese President Hu Jintao builds on an initial investigation conducted last year.
These were launched in spectacular dawn raids on Nuctech’s factories in the Netherlands and Poland. The company subsequently sued the Commission for defamation, but the case was dismissed by the EU’s General Court.
But while Brussels is on a certain and predictable path, the direction of some of the EU’s most prominent members is less clear.
France has been a strong supporter of the EU’s strong trade policy towards China, and French President Emmanuel Macron warned that U.S.-style tariffs may be imposed after returning from Beijing last week.
“I told them that if they did not react, we Europeans would be forced to take strong measures and stop cooperating in the coming months, following the example of the United States, such as imposing tariffs on Chinese products,” Macron told Les Echos.
However, this view was not shared by German Foreign Minister Johann Wadephul, who traveled to China this week and warned against imposing additional tariffs.
“I would say that these types of measures should only be viewed as a last resort and we should be extremely cautious… because once you get into a cycle like this, there’s usually a ping-pong effect or a spiral with further backlash that just hurts free trade,” Wadfil said.
The polarity between the EU’s two most powerful members is deepening the inconsistency in their strategies towards China, departing from Brussels’ preferred hard line.
Alicia Garcia-Herrero, Asia-Pacific economist at Natixis, said: “It is no longer a ‘Franco-German axis’, certainly not against China, and it has been that way for some time.”
“The irony is that Germany has suffered much more from not realizing what was happening. The impact of China’s impact on Germany is much greater than that of any other European economy. Is this blindness or the vested interests of a few large German companies?”
Even though Germany is home to Europe’s most important auto industry, state-owned rail company Deutsche Bahn decided to award a contract for 700 electric buses to BYD, a decision that sparked a backlash from unions worried about job losses.
“The federal government owns the railway. We hope it will not only make demands but also seriously fight for German jobs,” Martin Burkett, chairman of the Rail and Transport Union, told German magazine Der Spiegel.
Internal strife in Europe has delayed the submission of an industrial accelerator bill, which was due to be introduced on Wednesday. The bill would codify provisions to encourage companies to buy and produce in Europe in the face of fierce competition from China and the United States.
According to Politico, nine member states – the Czech Republic, Estonia, Finland, Ireland, Latvia, Malta, Portugal, Slovakia and Sweden – are concerned that a protectionist shift could end up doing more harm than good.
In an interview this week with Dutch newspaper NRC, industry chief Stephane Sejourne exposed Europe’s slow response to the multiple industrial threats it faces.
“Last month, I was supposed to go to Brazil to discuss the issue of rare earth mines. Three days ago we were told that the Americans had come and put money on the table and bought all production until 2030,” the French commissioner told the NRC.
“We know they’re looking at it, but we don’t think there will be any funds available because of the shutdown. They’ve taken that into account; the funds have been withheld.”
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