Nexperia row shows how China is weaponising trade and winning

"Tensions between Europe and China de-escalated over the weekend as Beijing confirmed it would ease restrictions on automotive chip supplies to the EU, prompting sighs of relief in car factories around the world. But it has only intensified the questions about the EU's asymmetric relationship with China, with many in industry, diplomacy and governments asking if Europe is no longer collateral damage in the wider Sino-American political war but a target in itself."

"We can buy a bit of time, but there is a sense that we are entering into a situation where we are going to be dealing with rolling crises from now on and that things have really crossed a threshold with China, said Andrew Small, a senior fellow at the German Marshall Fund thinktank and former China adviser within the European Commission."

"Crucially China agreed to resume the supply of Nexperia chips, but only for a 12-month period, and only for civilian use, leaving the way open for future action should Beijing wish to interfere in the EU's revived defence industry or turn the tap off again for the car industry. China is repeatedly now taking steps that does not actually stop industries from functioning but just chokes supplies. If this kind of stranglehold persists, it just puts Europe under a constant sword of Damocles, Small added."

The Dutch government took control of Nexperia, a Chinese-owned chip factory, nearly halting Europe's car industry. Beijing later agreed to ease automotive chip restrictions to the EU for 12 months for civilian use, temporarily relieving factories. The arrangement leaves the EU vulnerable to future supply manipulation, especially affecting defence and automotive sectors. China increasingly uses partial supply chokepoints rather than full bans, generating persistent crises and strategic leverage. The EU runs a large trade deficit with China and tariff measures like electric vehicle levies complicate the imbalance. Europe now faces targeted economic and political pressure from China.

Read at www.theguardian.com