Summary of Key Points
The European Union (EU) is pushing to revise its Cybersecurity Law, aiming to exclude companies from certain countries (including China) from participating in the construction of critical EU infrastructure by introducing vague concepts such as "non-technical risks." The China Council for the Promotion of International Trade and Commerce (CCPITC) and the Ministry of Commerce have firmly opposed this move, stating that the draft violates WTO rules and undermines economic and trade relations between China and the EU, as well as the stability of the global supply chain. If implemented, it could result in billions of euros in investment losses for the EU and the loss of tens of thousands of jobs. Additionally, the Global Economic and Trade Friction Index remained high in March, with the United States, India, and the EU being the main initiators of these tensions. The electronics industry has become a focal point of these frictions, with the United States leading the way in actions targeting China.
I. Flaws in the EU Draft: Vague Standards and Discrimination
The most criticized aspect of the revised Cybersecurity Law is the use of undefined terms like "non-technical risks" and "countries of cybersecurity concern," which directly equate companies from certain countries with potential risks. In other words, regardless of a company's technical capabilities or the safety of its products, if it comes from a "concerned country" (clearly referring to China), it is barred from participating in vital EU infrastructure projects such as power grids and communication networks.
The problems with this approach are twofold: first, there are no clear criteria for determining which countries are "concerned" or how to assess non-technical risks; these decisions are made solely by the EU, leaving companies with no way to predict them in advance. Second, it is a blatant form of discrimination—security assessments should be based on technical merit rather than a company's national origin, similar to judging a product's quality solely on its place of production, which is unreasonable.
II. Reasons for China's Opposition
The CCPITC and the Ministry of Commerce's opposition is well-founded:
1. Violation of International Rules: The WTO requires equal treatment for all member states (most-favored-nation principles), but the EU draft targets specific countries, violating agreements such as the General Agreement on Tariffs and Trade (GATT) and the General Agreement on Trade in Services (GATS), going against its own commitments.
2. Overreach of Authority: The EU's legal authority is limited; national security matters are typically the responsibility of the member states themselves. The draft seeks to usurp this authority, encroaching on their sovereignty.
3. A Losing Situation for Both Sides: If implemented, it will harm Chinese companies and the EU itself: fewer companies will be able to do business in the EU, leading to increased costs and supply chain instability, which will ultimately be passed on to EU consumers (e.g., through higher electricity and internet fees).
III. Potential Consequences of Implementation
Wang Yifei, a spokesperson for the CCPITC, outlined the specific impacts:
- Investment Losses: Investments in the EU could amount to billions of euros; for example, Chinese companies that planned to set up factories or projects in Europe might see them canceled.
- Job Disruptions: Tens of thousands of jobs in the EU could be affected, including those created by Chinese companies and local employees in related supply chain roles.
- Pressure on EU Companies: EU firms will face higher procurement costs and longer adaptation periods due to limited supplier options, which could slow down the EU's digitalization and green transformation efforts (e.g., delayed construction of renewable energy facilities).
IV. Current State of Global Economic and Trade Frictions
The March Global Economic and Trade Friction Index was 104, indicating high levels of tension:
- Leading Initiators: The United States, India, and the EU were among the top three, with the US leading for 11 out of 12 months.
- Impactful Industries: The electronics, chemicals, and transportation equipment sectors are most affected, especially the electronics industry due to intense technological competition.
- Common Tactics: Import and export restrictions, trade remedy investigations (anti-dumping, anti-subsidy measures), and technical barriers are frequently used, with import and export restrictions having the greatest impact on disrupting global supply chains.
V. Frictions Involving China
The March index for frictions involving China was 105, remaining unchanged from the previous month:
- United States at the Forefront: The US continues to be the primary initiator of actions against China.
- Targeted Industries: The electronics industry is particularly hit, with products such as routers, batteries, and e-cigarettes being subject to strict restrictions.
In summary, the EU's draft reflects broader global economic and trade tensions. Using "security" as a pretext for protectionism only harms everyone involved. Chinese companies hope to cooperate with the EU on fair and non-discriminatory terms.