ANOTHER threat from Beijing this morning against the EU - this time in response to the industrial accelerator act with its "Made in Europe" provisions and attempts to get Chinese firms to transfer tech to EU partners "If the EU ignores China's suggestions and insists on pushing for its enactment, thereby harming the interests of Chinese enterprises, China will have no choice but to take countermeasures to resolutely safeguard the legitimate rights and interests of Chinese enterprises."

New: Beijing has issued a direct threat to retaliate against EU companies, should the EU move forward with its proposed cybersecurity act, which would hit Chinese firms

scmp.com/news/china/dip… China will hit EU firms with reciprocal measures if the bloc targets Chinese firms as planned under its proposed cybersecurity regulations, Beijing has warned.

Also from me this morning - fascinating new research by @tobiasgehrke / @TGehrke_ showing the power and costs of Europe's economic weaponry for escalating things with China

The message: if the fragile US-China truce fails, the EU needs to "learn to fight for itself"
@TobiasGehrke @TGehrke_ New research puts EU leverage in buckets:

1. Chinese exports: tightening ASML screw could hit China hard, but draw major retaliation

Licensing, withholding software updates or more export controls on machine tools would hit Made in China priorities, but blowback vs Germany

Granular Chinese customs data for Jan-Feb out today

Spent the morning diving in to explain stunning rise in exports reported earlier in Jan

Surge in shipments to all but 2 EU member states
Huge rises in EV, battery, PHEVs
Massive Chinese surplus jump

All in USD vs Jan-Feb 2025
China's exports:

🇪🇺+26.4%
🇩🇪+31.4%
🇳🇱+ 17.9%
🇮🇹+36.4%
🇪🇸+ 33.3%
🇫🇷 +31.9%
🇵🇱+ 29.9%
🇧🇪+ 20.3%
🇨🇿+ 0.6%
🇭🇺+59.7%
🇬🇷-6%
🇸🇪+26.6%
🇩🇰+26.9%
🇷🇴+18.2%
🇸🇮+12.5%
🇵🇹+45.5%
🇮🇪+19.4%
🇲🇹-33.7%
🇦🇹+92.3%
🇸🇰+37.1%
🇫🇮+21.7%
🇧🇬+59.3%
🇭🇷+16.9%
🇱🇹+52.8%
🇨🇾+144.9%
🇪🇪+168.1%
🇱🇻+44.9%
🇱🇺+126.6%

Here we go - EU industry chief Stephane Sejourne presents the long-awaited Industrial Accelerator Act

"What I'm talking to you about isn't just a change in our modus operandi - it's actually a change in doctrine. This is something that was unthinkable even just a few months ago" "Europe, without a strong industrial base, without European social model, we won't have any climate transition, and we won't have strategic autonomy. Our goal is clear: We want to ensure that industry is represents 20% of European GDP by 2035 that's in contrast with 14% today"

Two new military spy scandals in Europe involving China - in Greece & France

1. In Greece, authorities arrested an air force officer on suspicion of espionage after he allegedly collected and transmitted classified military info – including material related to NATO – to China The arrest was carried out in the early hours of 5 February at a military facility and was coordinated with the country’s intelligence services

euractiv.com/news/greece-ar…

Greenland episode has seriously US image in Europe

Just 18% of EU citizens polled think Europe should align with the US in great power rivalry with China. 52% now want it keep the same distance between the 2

64% said US foreign policy is defined by "colonisation & predation"
A month ago just 10% thought the US would start a war with their country, now it's up to 21%. China is down from 14% to 9% while Iran remains at 18%.

Figures all from the new Eurobazooka from Le Grand Continent

legrandcontinent.eu/fr/2026/01/23/…

Most interesting quote in Macron post China interview in Les Echos is on ASML

He proposes "mutual dismantling of our aggressive policies, such as restrictions on the export of semiconductor machinery on European side and... rare earths on Chinese side"

lesechos.fr/monde/europe/l… The second? On Germany

"Germany is moving & becoming aware of the imbalances that also affect it, but it's not yet totally on our side; many German groups still have a strong presence in China"

The great slowdown: Germany at a standstill as ‘China shock’ hits

As Europe’s biggest economy is pummelled by structural problems and external threats, rocky China ties are compounding the dreary picture

My report from a rather depressing week in Berlin

scmp.com/news/china/dip… It is not unusual for Berlin to be cloaked in a blanket of grey on the brink of winter. What hangs over the city this year, however, feels heavier.

This new shade of gloom cuts through conversations about everything.

New: Dutch minister admits being blindsided by China’s retaliation in Nexperia chip crisis

In which I read an 18,000 word transcript of Karremans' Nexperia hearing in the Dutch House of Representatives so you don't have to

scmp.com/news/china/art… Export controls may have been the economic weapon of choice in 2025, but the Dutch minister at the centre of the Nexperia crisis has admitted he was blindsided by Beijing blocking the company’s chips from leaving China.

Very good read @JohnDelury: What China wants from Europe

"First thing Europeans must keep in mind is that at the level of grand strategy Europe isn't a priority. US remains the unavoidable great power China confronts... Beijing in a funny way has an America First foreign policy" @JohnDelury "Strategically speaking, Europe comes after pretty much the rest of the world. European security is a function of US power, and therefore Washington, not Brussels, is the place for Beijing to look in calculating implications for its own policy."

engelsbergideas.com/notebook/what-…

If anything, Trump-Xi talks have emphasised the tight spot the EU is in going into tomorrow's talks on export controls with China.

In order to lift rare earth restrictions for a year, Trump lowered tariffs, seems to have opened the door to Chinese investments, and paused probes If Brussels wants to get the same treatment, it will have to offer something in return. But as an entirely legalistic entity, it's not clear to me that the EU could do this.

What would China want? The most obvious thing is lifting controls on ASML EUV equipment sales to China

Breaking: EU ready to retaliate vs China's rare earth controls, VDL says in Berlin

EU is "ready to use all of the instruments in our toolbox to respond" she tells Berlin forum

Comes after Macron on Thursday called on the commission to activate the anti-coercion instrument "The decisions announced by the Chinese government on 9 October pose a significant risk. In essence, these actions would severely hamper other countries from developing a rare earths industry...

STORY:

scmp.com/news/china/dip…

A quiet bombshell in Europe’s tech world

The Dutch government seems to have effectively frozen operations of Nexperia, the Chinese-owned chipmaker, citing national security, according to corporate filing today - via @zichenwanghere

open.substack.com/pub/pekingnolo… @ZichenWanghere Nexperia’s Chinese parent, Wingtech, says it was blindsided.

It claims the Dutch Ministry of Economic Affairs issued an order on Sept 30 barring the firm and its global subsidiaries from changing assets, staff, or IP for a year.

Disappointed to hear Kaja Kallas dismiss my July reporting as a "Chinese leak".

I'd remind Kallas that soon after my story came out, multiple respected journalists from Western publications followed with their own stories, confirming what I'd reported. I know other reporters were briefed the same info that day, but I beat them to it by publishing my story first.

Versions of the story subsequently appeared in CNN, WSJ, FT, La Matinale Européenne...

Were they also being instrumentalised by Beijing?

First Politico, now Euractiv comparing Europe's current plight to China's "century of humiliation"


Politico

"After defeat by the British in First Opium War, Qing dynasty signed a treaty in 1842 condemning China to more than 100 years of foreign oppression & colonial control of trade policy

Fast forward nearly 2 centuries, EU is starting to understand exactly how that feels"

Is EU’s global clout fading amid gruelling stand-offs with China and the US?

What really happened at the EU-China summit?

And how does the fiasco in Scotland affect Europe's global standing?

My last piece before a 2-week break 🏝️

scmp.com/news/china/dip… After tense talks in Beijing and a bruising trade blow from Washington, EU bureaucrats are heading into their August break weary and short of wins, as doubts deepen over the bloc’s global leverage.

EU officials expect there to be a joint statement with the US on yesterday's deal - not-legally binding, working to have it ASAP.

This is expected to be along the lines of the US-Indonesia statement from roughly a week ago. Here's the Indonesian statement...

whitehouse.gov/briefings-stat…

EXCLUSIVE

Wang Yi told Kaja Kallas that China cannot afford for Russia to lose the war in Ukraine, otherwise the US will divert its full focus to Beijing

scmp.com/news/china/dip… The comment during yesterday's talks in Brussels confirms what many believe to be Beijing’s position on the war but jars with China’s public utterances.

Xi is *this* close to saying "overcapacity". On the tip of his tongue!

China needs to “lawfully regulate enterprises’ disorderly low-price competition, guide companies to improve product quality, promote the orderly exit of outdated production capacity”

scmp.com/economy/china-… In addressing the price wars plaguing many industries in China, the country’s top leadership has resorted to a phrase rarely seen at a high-level meeting, saying that enterprises’ “disorderly low-price competition” needs to be regulated.

NEW: Some bonkers numbers in China's May customs data.

Detailed figures came out Fri when I was off, so took a deep dive today

First big picture EU stuff:

China's EU exports up 12%
China's EU imports down 2.37%

There is a 22% increase in the EU's China deficit in May alone Earlier in the month we saw some big jumps in China's exports to the big EU markets

China's exports to Germany up 21.5%
China's exports to France up 24.1%
China's exports to Netherlands up 7.1%

But I did the sums for the 27 and it is pretty mad...