European Companies in China Face Losses in Inter Country Disputes
European companies keep becoming ‘collateral
damage’ in others’ disputes, laments president of the European Union Chamber of
Commerce in China
1. Key
Message to Europe
·
The European Union Chamber of Commerce in China has
urged the European Union to:
o
Take a proactive role in global trade
negotiations
o
Avoid becoming a “passive recipient” of
United States–China decisions
2. Core
Concern: China’s Export Controls
·
Beijing’s restrictions on rare earth elements
(critical for EVs, electronics, defence) have:
o
Caused operational and financial damage to
EU firms
o
Created uncertainty and compliance challenges
3. Why
Rare Earths Matter
·
These 17 elements are essential for:
o
Smartphones, EVs, defence systems, clean energy
tech
4.
Extraterritorial Risk
·
New rules (currently paused) may require:
o
Approval from China even for products made
outside China but using Chinese inputs
·
This is seen as the biggest long-term threat
to European companies.
5. Policy
Uncertainty
·
Firms face:
o
Opaque licensing processes
o
Slow approvals
o
Lack of clarity beyond November deadline
·
Companies cannot plan supply chains effectively.
6.
Strategic Implications
·
China’s export controls are:
o
A response to tariffs by Donald Trump
o
Part of broader geo-economic competition
·
They also allow China to:
o
Map global supply chain dependencies in
detail
7.
Europe’s Dilemma
·
European leaders (e.g., Emmanuel Macron) are
engaging China to:
o
Stabilize trade ties
·
But Europe faces risks of:
o
Supply chain dependence
o
Being caught between U.S. and China rivalry
8.
Business Warning
·
EU firms caution against:
o
A “race to the bottom” in trade restrictions
·
Emphasize need for:
o
Predictability
o
Transparency
o
Balanced trade policy
Bottom
Line
Europe is
being squeezed in a geo-economic contest:
·
China is leveraging supply chain dominance (rare
earths)
·
The U.S. is using tariffs and trade pressure
EU firms want Brussels to act independently to protect
its economic sovereignty, rather than reacting to decisions made by the
world’s two largest economies.
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 (14.04.2026), 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.”