European companies forced to adapt to “decoupling” driven by China

The term was first mentioned in November 2022 by the German Chancellor, Olaf Scholz, before in March 2023 the President of the European Commission, Ursula von der Leyen, set out a new concept to manage such a complex relationship with China. “slander”. It was less divisive than that “Decoupling” Promised by Washington, and more realistic given the depth of the current supply chain and Chinese market.

But China, for its part, has long made clear policies to limit its exposure and its dependence, forcing foreign companies to adapt — some having to locate more in China to comply with local regulations, others finding ways out. looking for . This reality is highlighted by a new report from the European Chamber of Commerce in China. “China’s approach is the broadest, the most far-reaching, in the way it has tried to prioritize economic security.”notes its president Jens Eskelund.

In 2014, President Xi developed a “A Holistic Approach to National Security” Which has only been strengthened by increasing commercial and strategic tensions, which has resulted in the transfer of a policy to every ministry since the entry into the Fourteenth Five Year Plan in 2020. Concretely, China has increased its production and storage capacity in the energy, food and strategic minerals sectors to mitigate the impact of potential global shocks.

Legal arsenal

Authorities have issued directives to get rid of foreign components and technologies in certain critical sectors. This is the case in “Hardware” Information technologies also in the less-discussed medical equipment sector, where market allocation rules expressly exclude non-Chinese players. The Science and Technology Daily, regarding one of the ministries in the same field, also published in 2018 a list of 35 key areas in which the state coordinates national efforts. For example: lithography machines to produce microchips, computer operating systems, components of medical imaging machines or even aeronautical quality metals.

At the same time, the People’s Republic has armed itself with a legal arsenal to protect critical areas and be ready to retaliate. In 2020, China enacted a new export control law, which was used to ban deliveries of gallium and germanium, two key minerals used in semiconductor production, in 2023. In October 2023, it limited sales of graphite, specifically used in batteries, in response to American restrictions on the sale of microchips for the artificial intelligence sector.

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