Welcome to the latest issue of the newsletter! As always, there is a lot to unpack, so let’s get down to business.

This week, Eurasia Dispatch covers:

• Institutions

  • MEPs visit China as both sides call for continued dialogue

• Member states

  • Franco-German deal could shape EU industrial policy

• Business

  • Russia sanctions trigger fresh EU-China trade frictions

• Commentary

  • Le Monde: China’s AI ambition and Europe’s strategic dilemma

INSTITUTIONS

MEPs visit China as both sides call for continued dialogue

A delegation from the European Parliament’s Committee on Foreign Affairs visited Beijing and Shanghai for high-level discussions with Chinese officials, marking another step in the gradual resumption of parliamentary engagement between the two sides. The visit included meetings with Foreign Minister Wang Yi, senior representatives of the National People’s Congress, academics and business representatives.

The discussions reflected the breadth of the EU-China agenda. MEPs reiterated concerns over China’s alleged support for Russia through dual-use exports, human rights issues and the EU’s widening trade deficit, calling for greater reciprocity and a more level playing field in economic relations. They also urged Beijing to use its influence to support a ceasefire in Ukraine consistent with international law.

Chinese officials, meanwhile, stressed that China and the EU should remain partners rather than rivals, cautioning against politicising trade or expanding the definition of economic security. Beijing also called for stronger cooperation on issues such as climate change, artificial intelligence and multilateral governance.

The Eurasia Dispatch Take: Despite continuing differences, both sides reaffirmed their support for maintaining regular dialogue, indicating that political engagement remains an important mechanism for managing an increasingly complex relationship. The timing is notable. The European Parliament’s Committee on Foreign Affairs is expected to adopt its recommendations on EU-China political relations in the autumn, around the same period that Brussels has set as the target for achieving tangible progress in trade discussions with Beijing. Together, these milestones underline that EU-China relations are entering a particularly important phase. The coming months are likely to provide a clearer indication of whether recent diplomatic engagement can translate into meaningful progress, or whether existing political and economic disagreements will continue to dominate the relationship.

MEMBER STATES

Franco-German deal could shape EU industrial policy

France and Germany are negotiating a broad industrial agreement that could shape key elements of the EU’s economic agenda ahead of a series of important autumn meetings. The proposed compromise seeks to combine French support for stronger “Made in Europe” rules with German efforts to ease the EU’s planned 2035 phase-out of new combustion-engine cars.

Under the discussions, Germany would back stricter European preference rules in public procurement and subsidy schemes, while France would consider greater flexibility for the automotive sector. The negotiations are expected to continue throughout the summer, to reach an agreement before meetings of EU industry ministers in September and EU leaders in October. Differences remain over the scope of “Made in Europe” provisions, the treatment of trusted non-EU partners and the future direction of the bloc’s industrial and climate policies.

The Eurasia Dispatch Take: If successful, a Franco-German compromise could provide political momentum for several major EU initiatives. The timing is significant, as the negotiations coincide with discussions on the Industrial Accelerator Act, the EU’s next long-term budget and efforts to rebalance trade relations with China. A common Franco-German position would strengthen the EU’s ability to pursue a more coherent industrial and trade strategy, addressing a long-standing obstacle to collective action. At the same time, a more unified approach could also lead to a firmer stance towards Beijing, potentially complicating ongoing trade negotiations. The challenge for the EU will be to balance greater internal cohesion with preserving a stable economic relationship with China, avoiding outcomes that could lead to lasting damage to bilateral trade and investment ties.

BUSINESS

Russia sanctions trigger fresh EU-China trade frictions

The EU’s latest sanctions package against Russia has intensified economic tensions with China, as Beijing followed it up with export controls targeting European companies. The bloc’s 21st sanctions package added 14 Chinese entities to its list of organisations accused of helping Russia circumvent restrictions, alongside measures targeting Russian energy, finance and military-related sectors.

China subsequently imposed export controls on 14 European entities, including companies from Germany, France, Italy and the Czech Republic, preventing them from receiving Chinese dual-use goods without approval. Beijing described the move as a reciprocal response to what it views as unjustified EU measures.

The Eurasia Dispatch Take: The episode illustrates the growing overlap between economic security, trade policy and geopolitical considerations. While the EU maintains that targeting companies linked to Russia is necessary to ensure the effectiveness of its sanctions regime, China has criticised the measures and state media warned that they could negatively affect broader economic relations.

The latest exchange takes place as Brussels and Beijing continue discussions on trade-related issues, including market access and industrial imbalances. Although the reciprocal measures appear limited in scope and focused on a relatively small number of companies, they add further friction to the relationship. The move is unlikely to create a favourable environment for reaching compromises on the wider trade disputes currently under discussion.

COMMENTARY

Le Monde: China’s AI ambition and Europe’s strategic dilemma

In a recent editorial, Le Monde argues that China’s growing ambitions in artificial intelligence could challenge Europe’s traditional approach of relying on regulation as a source of global influence. The newspaper’s analysis follows the Shanghai World AI Conference, where Beijing promoted a vision of AI development centred on accessibility, international cooperation and closer alignment between technology and state priorities.

According to Le Monde, China’s strategy reflects a broader pattern seen in sectors such as electric vehicles and clean technologies: competing not only through technological progress, but also through affordability and large-scale adoption. The editorial acknowledges concerns over China’s governance model, while arguing that Beijing’s combination of technological offerings and diplomatic outreach could appeal to many countries.

The piece also questions whether Europe’s regulatory approach can maintain global influence without stronger industrial capabilities. While the EU has positioned itself as a leader in digital standards, Le Monde argues that rules alone may have limited impact if they are not supported by competitive industries and technological capacity. The editorial concludes that Europe faces pressure to develop a stronger industrial strategy alongside its regulatory ambitions.

The Eurasia Dispatch Take: China’s approach to global governance reflects a long-standing element of its foreign policy: building influence by strengthening ties with developing countries, which represent a significant share of the international community due to their numbers and collective voting power. Beijing has used similar strategies in the past, including during efforts to secure broader international support at the United Nations, and continues to apply this approach to promote its own initiatives and governance models.

Rather than viewing these developments solely through the lens of strategic competition, the EU could benefit from exploring how it can engage with emerging frameworks while protecting its interests. One possible approach would be to position itself as a bridge between different models, participating in both US- and China-led initiatives where possible and promoting greater stability in global technology governance.

BEFORE YOU GO

Sanctions, AI governance and industrial policy have shaped the Eurasian discourse over the past weeks. Developments on these fronts will reverberate across global politics, trade, and defence. If you are interested in how these processes evolve, stay tuned for further updates in the next issue of Eurasia Dispatch! Thank you for reading, and we’d love to hear your thoughts—feel free to share your insights and feedback.

Until next time,

Eurasia Dispatch

Disclaimer: I manage this Substack account independently, in my personal capacity. The views expressed are my own and do not represent the views of my affiliated institutions.

Welcome to the latest issue of the newsletter! As always, there is a lot to unpack, so let’s get down to business.

This week, Eurasia Dispatch covers:

• Institutions

  • October EU-China trade deadline faces mounting pressure

• Member states

  • France and Germany seek a common China trade strategy

• Business

  • EU imposes record €550m fine on AliExpress

• Commentary

  • Competing visions for EU-China trade strategy

INSTITUTIONS

October EU-China trade deadline faces mounting pressure

The prospects of achieving the “tangible results” promised by October in EU-China trade talks appear increasingly uncertain as Brussels continues to prepare additional defensive measures while hardening its assessment of Beijing. Recent reports indicate that the European Commission is establishing a cross-departmental task force to prepare for potential supply chain disruptions, particularly involving rare earths, alongside new initiatives to reduce strategic dependencies and diversify critical imports.

At the same time, senior Commission officials have indicated that dialogue alone will not be sufficient, signalling that unilateral trade defence measures could be introduced before October if negotiations fail to produce satisfactory progress. Separately, EU foreign ministers adopted a policy paper that described China as a ‘critical long-term strategic challenge’, citing trade imbalances, technological competition, critical raw materials, and Beijing’s support for Russia.

The Eurasia Dispatch Take: These developments suggest that while formal dialogue with China continues, EU institutions are also preparing for the possibility that negotiations may not deliver meaningful progress by the autumn. The prominence given to potential trade defence measures and contingency planning in recent weeks points to an increasing emphasis on managing risks alongside maintaining dialogue. This could reflect an effort by Brussels to strengthen its negotiating position by signalling its willingness to act if talks prove unsuccessful. Alternatively, it may indicate limited expectations that the current negotiations will produce substantive breakthroughs. Whatever the motivation, recent public messaging from EU institutions has focused more on trade defence, economic security, and strategic resilience than on expanding cooperation, suggesting that the relationship is entering a more cautious and security-oriented phase, even as both sides continue to engage through formal dialogue.

MEMBER STATES

France and Germany seek a common China trade strategy

France and Germany have agreed to develop a joint roadmap by September to address what they see as growing trade imbalances with China, signalling closer alignment between the EU’s two largest economies. Speaking after a bilateral government meeting near Cologne, French President Emmanuel Macron said the roadmap would strengthen the European Commission’s mandate to accelerate trade investigations and deploy trade defence instruments where necessary.

Macron argued that Chinese trade practices are putting pressure on European industries, highlighting sectors including chemicals, machine tools, and automotive manufacturing. German Chancellor Friedrich Merz echoed these concerns, pointing to the EU’s widening goods trade deficit with China, which reached around €360 billion in 2025, and said the imbalance should be addressed to protect European industry.

The two leaders also raised broader structural issues. Macron called for dialogue with Beijing on exchange rates and financial market access, while Merz questioned why the renminbi is not freely convertible if its valuation reflects market conditions. The roadmap is expected to be prepared by the two countries’ economy, finance, and foreign ministers before being presented in September.

The Eurasia Dispatch Take: Germany’s traditional caution towards tougher EU measures on China appears to be diminishing, suggesting a greater willingness to align with member states advocating a more assertive trade policy. This shift could have important implications for EU–China relations, as it strengthens the political backing for the European Commission’s de-risking agenda and trade defence measures. It also reflects a broader trend in which strategic and economic security considerations are increasingly taking precedence over purely commercial interests. At the same time, a more restrictive trade relationship with China is likely to carry economic costs, including higher prices for numerous goods and increased adjustment costs for businesses. While it remains too early to assess how this evolving German position will influence the ongoing EU–China trade negotiations, it is unlikely to make searching for a negotiated compromise any easier.

BUSINESS

EU imposes record €550m fine on AliExpress

The European Commission has imposed a record €550 million fine on Alibaba-owned AliExpress for failing to prevent the sale of illegal and unsafe products on its platform, marking the largest penalty issued under the Digital Services Act (DSA). Following an investigation launched in 2024, the Commission concluded that AliExpress had not put in place adequate systems to identify and remove counterfeit goods and unsafe products, including toys, cosmetics and other consumer items. Regulators also found that the platform devoted insufficient resources to content moderation and that its recommendation and advertising systems continued to promote products that had already been identified as non-compliant.

The fine significantly exceeds previous DSA penalties imposed on Temu and X, although it remains well below the maximum available under the legislation. AliExpress has rejected the decision as disproportionate and confirmed that it will appeal. The company must also submit an action plan by October outlining how it intends to address the identified shortcomings or risk further enforcement measures. The decision underscores Brussels’ increasingly assertive enforcement of the DSA against major online platforms operating in the European market.

The Eurasia Dispatch Take: The popularity of Chinese e-commerce platforms has grown as European consumers seek lower-cost alternatives amid persistently high living costs and energy prices. This makes effective product safety enforcement increasingly important, ensuring that consumers benefit from competitive prices without being exposed to counterfeit or unsafe goods. From that perspective, the Commission’s action is consistent with its broader objective of strengthening consumer protection in the digital marketplace. Financially, the €550 million penalty represents only a small fraction of Alibaba’s annual global revenue, suggesting that its immediate commercial impact is likely to be limited. However, the decision carries greater symbolic significance, signalling the EU’s willingness to enforce the Digital Services Act against major platforms and potentially creating reputational costs for companies found to have fallen short of the bloc’s regulatory standards.

COMMENTARY

Competing visions for EU-China trade strategy

Two recent commentaries illustrate sharply contrasting views of how the EU should approach its increasingly strained economic relationship with China. In an interview with Euronews, European Parliament China delegation chair Engin Eroglu argued that the EU holds significant leverage through its large consumer market. He maintained that tighter restrictions on Chinese exports could expose structural weaknesses in China’s export-led economy, while defending stronger trade measures to protect European industry from subsidised competition.

By contrast, an EUobserver commentary penned by Frances Li, a Europe analyst with the Economist Intelligence Unit in London, warned that an increasingly confrontational strategy risks provoking costly escalation. It argued that Europe’s dependence on Chinese supply chains, particularly for critical raw materials, leaves the EU vulnerable to escalation and that replacing these links would require enormous investment over decades. Rather than relying on tariffs and restrictions, the article advocates a more defensive industrial strategy centred on strengthening European competitiveness, supporting emerging industries, and reducing future dependencies without directly targeting China.

The Eurasia Dispatch Take: The two pieces highlight the growing debate over whether the EU should prioritise economic pressure or a longer-term strategy of strengthening its own resilience. Anti-dumping measures have been part of the EU’s trade policy for many years, yet concerns over industrial competitiveness and trade imbalances have persisted, suggesting that such instruments alone may have limited effectiveness. By contrast, a defensive industrial strategy focused on reducing strategic dependencies and supporting domestic industries offers a different approach. Given the high degree of economic interdependence between the EU and China, this framework seeks to enhance Europe’s long-term competitiveness while limiting the risk of further escalation. Whether such an approach proves more effective will depend on its implementation and the willingness of both sides to manage differences through dialogue rather than retaliation.

BEFORE YOU GO

Trade defence, a record-breaking AliExpress fine and converging member state policies have shaped the Eurasian discourse over the past weeks. Developments on these fronts will reverberate across global politics, trade, and defence. If you are interested in how these processes evolve, stay tuned for further updates in the next issue of Eurasia Dispatch! Thank you for reading, and we’d love to hear your thoughts—feel free to share your insights and feedback.

Until next time,

Eurasia Dispatch

Disclaimer: I manage this Substack account independently, in my personal capacity. The views expressed are my own and do not represent the views of my affiliated institutions.

Welcome to the latest issue of the newsletter! As always, there is a lot to unpack, so let’s get down to business.

This week, Eurasia Dispatch covers:

• Institutions

  • Commission plans tighter public procurement rules for foreign companies

• Member states

  • Netherlands and China seek to improve economic ties amid semiconductor tensions

• Business

  • EU imposes anti-dumping duties on Chinese tyre imports

• Commentary

  • Bruegel study questions the effectiveness of the EU’s critical raw materials strategy

INSTITUTIONS

Commission plans tighter public procurement rules for foreign companies

The European Commission is preparing new rules that would allow public authorities to exclude foreign companies from EU public procurement where they are deemed to pose risks to security or public safety. According to a draft regulation expected in September, authorities would be able to assess whether a company’s ownership, control, or financing creates a risk of undue foreign influence, or whether third-country laws could require the disclosure of sensitive information or interfere with contract performance.

The proposal would apply to sectors including energy, water, transport, postal services, and oil and gas extraction. It would also permit, though not require, contracting authorities to give preference to European suppliers in public procurement. The draft reflects growing concerns over foreign interference, cybersecurity, and strategic dependencies, particularly following China’s restrictions on rare earth exports and broader debates over reliance on foreign technology providers. Several member states, including France, Germany, Italy, and Denmark, have already restricted Chinese companies, such as Huawei, from participating in public contracts on security grounds. At the same time, France has also replaced US technology providers in certain sensitive government systems.

The Eurasia Dispatch Take: The proposal is broadly consistent with the EU’s wider de-risking agenda and reflects a growing emphasis on reducing security vulnerabilities linked to external suppliers. Notably, the draft is not aimed exclusively at Chinese companies. Its criteria could also affect firms from the United States or other third countries where foreign legislation or ownership structures are considered to create security risks.

At this stage, the proposal remains a draft and could change before it is formally adopted. It is also limited to public procurement rather than representing a broader restriction on market access. If implemented, the measures would place greater weight on security considerations in procurement decisions, even where this may increase costs or reduce the pool of eligible suppliers. An important question will be whether European alternatives can provide the required scale, quality, and reliability in sectors where foreign suppliers may be excluded.

MEMBER STATES

Netherlands and China seek to improve economic ties amid semiconductor tensions

The Netherlands and China have signalled a willingness to stabilise bilateral economic relations following talks between Dutch Trade Minister Sjoerd Sjoerdsma and Chinese Commerce Minister Wang Wentao in Beijing. The discussions covered bilateral trade, investment, semiconductor supply chains, and broader China-EU economic relations, with both sides describing the exchanges as constructive and forward-looking.

A key topic was the ongoing dispute involving Dutch-headquartered chipmaker Nexperia and its Chinese parent company, Wingtech. Sjoerdsma said the Dutch and Chinese governments were cooperating to contain the dispute’s impact, while noting that a lasting resolution would ultimately depend on an agreement between the companies involved. The Dutch minister also defended the Netherlands’ semiconductor export control regime, saying existing restrictions were effective in protecting national security.

For its part, China called on the Netherlands to provide a fair and predictable environment for Chinese investors and maintain stable semiconductor supply chains. Beijing also urged The Hague to play a constructive role within the EU by supporting dialogue with China. The two countries signed a memorandum establishing a China-Netherlands CEO Council to strengthen business cooperation, with representatives from more than 30 companies attending the inaugural meeting.

The Eurasia Dispatch Take: Resolving the Nexperia dispute would remove one of several persistent sources of tension in China-Netherlands relations and could contribute to a more stable bilateral relationship. Given the Netherlands’ importance in Europe’s semiconductor ecosystem and its traditionally pragmatic approach to trade, a stabilisation of relations could provide China with a valuable channel for engagement with a key EU member state as broader trade negotiations with Brussels continue. However, even a mutually acceptable settlement is unlikely on its own to shift the wider trajectory of EU-China relations, where disagreements over market access, trade defence measures, and reciprocity remain significant.

BUSINESS

EU imposes anti-dumping duties on imports of tyres from China

The European Commission has imposed definitive anti-dumping duties on imports of passenger car and light commercial vehicle tyres from China, concluding that Chinese producers were selling tyres in the EU at unfairly low prices that harmed the bloc’s domestic industry. The duties, which follow an investigation launched in November 2025, range from 4.3% to 45.3% depending on the exporter, with the highest rate applying to non-cooperating producers.

The measures cover new pneumatic rubber tyres used on passenger cars, buses, and light lorries with a load index not exceeding 121. According to the Commission, the imports caused material injury to the EU tyre industry, which employs more than 80,000 people across 14 member states. Companies that cooperated with the investigation will be subject to lower, company-specific duty rates, while all other Chinese exporters will face the maximum tariff. The regulation also establishes a mechanism allowing new Chinese exporters to apply for individual duty rates if they can demonstrate they were not involved during the investigation period and meet the Commission’s eligibility criteria.

The Eurasia Dispatch Take: The adoption of these duties suggests that the EU’s de-risking agenda continues alongside its dialogue with Beijing, especially considering the newly started investigation into Pekin duck. Although the investigation was launched well before the recent improvement in diplomatic engagement, its conclusion comes during a critical phase in EU-China trade relations, with both sides aiming to deliver “tangible results“ by October. The Commission could have delayed or softened the measures as a political signal, but instead allowed the process to run its course, indicating that trade defence investigations remain separate from ongoing negotiations. The decision also increases pressure on the broader talks. How China responds will be closely watched, as any retaliatory measures could further strain the relationship, while a restrained response may be interpreted negatively, too.

COMMENTARY

Bruegel study questions the effectiveness of the EU’s critical raw materials strategy

A new analysis from Bruegel finds that the European Union’s strategy to secure critical raw materials (CRMs) is unlikely to achieve its objective of significantly reducing external dependencies. CRMs are essential for sectors including batteries, semiconductors, and clean energy technologies, but the EU continues to face concentrated supply chains, rising global demand, and increasing competition from other major economies.

The study assesses the EU’s approach across three areas: 60 strategic raw material projects, partnerships with third countries, and trade agreements containing CRM provisions. It concludes that the current portfolio of strategic projects is unlikely to deliver the levels of domestic production needed to meet the bloc’s self-sufficiency ambitions. It also finds that strategic partnerships have yet to generate measurable trade benefits. By contrast, trade agreements incorporating CRM provisions have been the EU’s most effective external policy tool, contributing to increased exports of critical raw materials to the bloc.

The authors recommend better aligning investments with supply risks, strengthening governance through trade agreements and international partnerships, and providing greater support for strategic projects. They also advise caution towards US-backed price floor proposals, arguing that bilateral supply agreements and broader international cooperation may offer more durable improvements in supply security.

The Eurasia Dispatch Take: The study’s conclusions broadly align with earlier observations by the European Court of Auditors, which argued that the targets set out in the Critical Raw Materials Act are unlikely to be achieved under current conditions. Together, they highlight the scale of the challenge facing the EU as it seeks to build more resilient supply chains.

In practice, the EU’s strategy depends on several complementary elements rather than a single solution. Continued access to Chinese rare earths is likely to remain important in the near to medium term, even as Brussels pursues greater strategic autonomy. At the same time, partnerships with other supplier countries, including Japan and Australia, can help diversify sources of supply. Expanding domestic mining, processing, and recycling capacity will also be necessary if the EU is to reduce long-term vulnerabilities. Progress is therefore likely to depend on combining external partnerships with gradual development of internal capabilities, rather than relying on any one approach alone.

BEFORE YOU GO

Trade defence measures and critical raw materials have shaped the Eurasian discourse over the past weeks. Developments on these fronts will reverberate across global politics, trade, and defence. If you are interested in how these processes evolve, stay tuned for further updates in the next issue of Eurasia Dispatch! Thank you for reading, and we’d love to hear your thoughts—feel free to share your insights and feedback.

Until next time,

Eurasia Dispatch

Disclaimer: I manage this Substack account independently, in my personal capacity. The views expressed are my own and do not represent the views of my affiliated institutions.

Welcome to the latest issue of the newsletter! As always, there is a lot to unpack, so let’s get down to business.

This week, Eurasia Dispatch covers:

• Institutions

  • October deadline raises pressure on EU-China trade talks

• Member states

  • Wang Yi visits Nordic capitals amid broader EU-China engagement

• Business

  • Europe’s heatwave reveals the practical realities of EU-China trade

• Commentary

  • Europe needs a strategic, leader-level China debate

INSTITUTIONS

October deadline raises pressure on EU-China trade talks

Senior EU figures are sending increasingly firm signals ahead of the October deadline set for achieving “tangible results” in EU-China trade negotiations. European Commission President Ursula von der Leyen has warned that Brussels is prepared to deploy additional trade instruments if dialogue fails to produce meaningful progress, while European People’s Party leader Manfred Weber has cautioned that relations could enter a more confrontational phase without a significant reduction in trade imbalances. At the same time, Bernd Lange, chair of the European Parliament’s trade committee, has questioned whether a legally binding agreement can realistically be concluded by October, suggesting that a political framework is a more achievable objective.

Chinese state media criticised the EU’s increasingly forceful public messaging, arguing that setting deadlines and signalling potential retaliation risks undermining the dialogue launched through the newly established EU-China Trade and Investment Consultations. They contend that trade imbalances reflect broader structural factors, including competitiveness, market demand, and export controls, rather than issues that can be resolved through political pressure alone. While these arguments reflect Beijing’s perspective, they also illustrate the widening gap between the two sides’ public narratives.

The Eurasia Dispatch Take: Brussels’ increasingly firm rhetoric indicates that incremental or symbolic progress is unlikely to be sufficient to alter the EU’s evolving approach towards China. However, the precise meaning of “tangible results” remains undefined, with expectations differing across institutions and member states. In this context, a more realistic outcome by the October deadline could be the establishment of a political framework outlining the broader parameters of EU-China trade rebalancing. Such a framework would primarily aim to improve transparency, predictability, and stability in the relationship, rather than deliver immediate shifts in trade flows.

More substantive agreements, particularly those relating to rare earths and high-technology trade, would likely be more difficult to achieve within the same timeframe. While these areas are central to ongoing discussions on economic security and supply chain resilience, progress is expected to require longer, more technical negotiations. As a result, near-term outcomes are likely to focus on process rather than structural change.

MEMBER STATES

Wang Yi visits Nordic capitals amid broader EU-China engagement

Chinese Foreign Minister Wang Yi is on a Nordic tour that comes at a sensitive moment in EU-China relations. The trip has included meetings with senior political leaders and business representatives, with discussions focusing on trade, investment, green transition, innovation, artificial intelligence, and climate cooperation. Across the three capitals, officials expressed interest in maintaining dialogue and expanding cooperation with Beijing in a range of economic sectors.

According to some, the timing of the tour may suggest that Beijing is seeking to engage both the EU and individual member states as Brussels considers additional trade measures against Chinese exports. During the visits, Chinese state media reported that discussions focused on strengthening bilateral economic cooperation. Wang also met representatives of the Swedish business community.

The Eurasia Dispatch Take: The visits provide an opportunity to reinforce bilateral political and economic ties while discussions continue with EU institutions. The Nordic countries have also faced renewed uncertainty in their transatlantic relationships in recent months, which may create additional incentives to maintain dialogue with a range of international partners, including China.

It remains too early to assess whether this diplomatic effort will influence broader EU positions on China or the ongoing trade talks. Nevertheless, the tour has already provided a platform for strengthening bilateral engagement with several advanced European economies through discussions on trade, investment, innovation, and green cooperation. Even if it does not alter the wider trajectory of EU-China relations, the visits contribute to maintaining channels of communication with key member states.

BUSINESS

Europe’s heatwave reveals the practical realities of EU-China trade

Europe’s record summer heatwave has highlighted an unexpected dimension of the EU’s economic relationship with China. Surging demand for air conditioners, a market dominated by Chinese manufacturers, has coincided with Brussels’ renewed efforts to reduce its trade deficit with Beijing and strengthen economic security. At the recent EU-China Trade and Investment Consultations, both sides agreed to pursue “tangible results” on trade by October while establishing mechanisms to address market access and trade imbalances.

The rapid uptake of Chinese cooling equipment illustrates the practical challenges facing the EU’s de-risking agenda. Chinese manufacturers have gained significant market share by developing products tailored to European regulations and consumer needs, while Europe’s domestic production remains limited. The episode has also fuelled broader debate over whether growing imports primarily reflect structural industrial competitiveness, consumer demand, or supply-chain constraints.

As the EU weighs additional trade defence measures in selected sectors, policymakers face the challenge of balancing efforts to reduce strategic dependencies with the continued reliance of European consumers and businesses on competitively priced Chinese products. The heatwave has underscored how closely industrial policy, climate adaptation, and trade have become intertwined in the EU-China relationship.

The Eurasia Dispatch Take: The recent surge in demand for Chinese-made air conditioners illustrates the practical constraints that can complicate the EU’s broader policy objectives. Ambitions such as reducing the trade deficit or lowering strategic dependencies may appear straightforward in principle, but are often more difficult to implement in practice. The more significant issues lie elsewhere. For the EU, securing reliable access to rare earths and other critical materials remains a priority, while China has expressed interest in importing more European products, particularly advanced industrial goods such as semiconductor manufacturing equipment, where export restrictions may limit progress. Against this backdrop, consumer goods such as air conditioners are only one part of a much broader trade relationship. The key question is whether both sides can make meaningful progress on addressing these structural issues in the coming months. Otherwise, trade frictions are likely to remain a recurring feature of EU-China relations.

COMMENTARY

Europe needs a strategic, leader-level China debate

Steven Everts, Director of the EU Institute for Security Studies (EUISS), argues that the EU continues to treat China as an important but non-urgent issue, despite its growing impact on Europe’s economy and security. Reflecting on the recent European Council, he notes that discussions on Russia and the EU budget dominated the agenda, while China was addressed only late in the summit and largely through the lens of competitiveness rather than as a broader strategic challenge.

According to Everts, China now shapes a wide range of policy areas, including industrial competitiveness, technology, critical raw materials, and defence, requiring a more comprehensive political response rather than a series of sector-specific measures. He argues that Europe’s economic vulnerabilities, widening trade deficit, and dependence on critical Chinese inputs have become strategic concerns that demand greater political attention.

Everts also cautions that Europe should pursue its own China policy rather than simply mirror the United States. In his view, this requires greater investment in industrial resilience, stronger trade and investment tools, and a willingness by EU leaders to make politically difficult decisions to reduce long-term vulnerabilities while safeguarding Europe’s strategic interests.

The Eurasia Dispatch Take: While it is understandable that Russia and Ukraine dominate the EU’s agenda, given their direct implications for European security, this does not preclude progress in relations with China. Recent developments suggest that engagement remains possible, with both sides agreeing after the Sefcovic-Wang meeting to work towards delivering ‘tangible results’ on trade. At the same time, the broader relationship remains characterised by a dual track of dialogue alongside continued efforts by the EU to strengthen its trade defence instruments.

The current trajectory of EU-China relations is difficult to sustain over the long term. A pragmatic compromise, even if limited in scope rather than a comprehensive agreement, could help stabilise the relationship, manage disputes more effectively, and preserve channels for continued economic engagement.

BEFORE YOU GO

Trade talks, bilateral engagement, and heatwave prompted trade shifts have shaped the Eurasian discourse over the past weeks. Developments on these fronts will reverberate across global politics, trade, and defence. If you are interested in how these processes evolve, stay tuned for further updates in the next issue of Eurasia Dispatch! Thank you for reading, and we’d love to hear your thoughts—feel free to share your insights and feedback.

Until next time,

Eurasia Dispatch

Disclaimer: I manage this Substack account independently, in my personal capacity. The views expressed are my own and do not represent the views of my affiliated institutions.

Welcome to the latest issue of the newsletter! As always, there is a lot to unpack, so let’s get down to business.

This week, Eurasia Dispatch covers:

• Institutions

  • EU and China establish trade dialogue framework amid rising economic tensions

• Member states

  • Austria positions itself as a bridge in strained EU-China relations

• Business

  • The EU faces practical challenges in reducing its reliance on Chinese energy technology

• Commentary

  • India expands trade defences with new duties on strategic chemical imports

INSTITUTIONS

EU and China establish trade dialogue framework amid rising economic tensions

The EU and China have launched a new Trade and Investment Consultations (TIC) mechanism to manage growing economic frictions and establish a structured channel for dialogue. The first meeting between EU Trade Commissioner Maros Sefcovic and Chinese Commerce Minister Wang Wentao focused on stabilising bilateral ties and addressing concerns over trade imbalances, export controls, intellectual property, and WTO reform.

Both sides agreed to establish working groups on these areas, alongside a joint monitoring mechanism to improve transparency on trade flows and help manage potential disruptions. Discussions also covered market access issues and rare earth export controls, with both parties signalling a willingness to continue negotiations.

The Eurasia Dispatch Take: The initiative comes as the EU considers stronger trade defence measures against China while also seeking to avoid escalation and preserve economic ties. The mechanism does not resolve existing disputes, but it creates a structured channel to manage them. However, tensions remain visible. Shortly after the Sefcovic-Wang meeting, the EU introduced measures to support its steel industry and restrict low-value e-commerce imports, amid ongoing concerns over the bloc’s trade imbalance with China. Meanwhile, European People’s Party leader Manfred Weber warned that relations could enter a more confrontational phase unless both sides make progress on reducing trade imbalances by autumn. The key question is whether the new dialogue platform can deliver concrete results while balancing concerns over economic dependencies with the need to maintain cooperation.

MEMBER STATES

Austria positions itself as a bridge in strained EU-China relations

During her 25 June meeting with Chinese Foreign Minister Wang Yi in Beijing, Austrian Foreign Minister Beate Meinl-Reisinger highlighted the importance of maintaining dialogue between the two sides. The meeting comes as EU-China relations face growing tensions over trade imbalances, market access, and strategic dependencies, while member states remain divided on the appropriate response.

Austria has adopted a more cautious approach than some EU partners, emphasising economic engagement alongside efforts to reduce vulnerabilities. With hundreds of Austrian companies operating in China and Chinese investment expanding in Europe, Vienna has an interest in maintaining stable economic ties.

Beijing’s outreach to Austria reflects efforts to preserve dialogue with individual European capitals as EU debates on economic security continue. Austria, meanwhile, has positioned itself as supportive of a stronger European approach while advocating continued cooperation with China, highlighting the broader challenge of balancing risk reduction with economic interdependence.

The Eurasia Dispatch Take: If recent reports are accurate, Germany may be moving towards a more restrictive position on China, which would complicate Beijing’s strategy of strengthening ties with individual EU member states like Austria while relations with EU institutions remain strained. A shift in Berlin’s approach would be particularly significant given Germany’s economic weight and its traditionally pragmatic engagement with China.

However, maintaining constructive relations with individual member states remains important for preserving channels of communication and limiting further deterioration. At the same time, the potential shift highlights the need for Brussels and Beijing to find areas of compromise if they want to maintain a functional relationship. Managing differences through dialogue will likely become increasingly important as economic and strategic tensions continue to shape EU-China relations.

BUSINESS

The EU faces practical challenges in reducing its reliance on Chinese energy technology

The EU’s plan to phase out Chinese-made power inverters from EU-funded projects reflects growing concerns over the security of critical energy infrastructure, particularly the potential risks associated with remote access and grid disruption. However, industry stakeholders and investors warn that replacing Chinese suppliers in the short term may prove difficult.

European institutions are assessing whether domestic manufacturers and alternative suppliers can meet demand without causing higher costs, project delays, or supply shortages. While European producers argue that capacity can expand, financial institutions have raised concerns that a rapid phase-out could affect renewable energy projects already dependent on Chinese technology.

The challenge extends beyond manufacturing capacity. Chinese suppliers often provide integrated solutions, competitive pricing, and technical services that would need to be replaced.

The Eurasia Dispatch Take: The challenge is not new. Previous assessments from the European Court of Auditors have highlighted that some EU ambitions in areas such as semiconductor production and critical raw material resilience require further adjustments to become realistic. The difficulty lies in translating strategic objectives into feasible policies.

One possible approach would be to use public funding to offset the higher costs of alternative suppliers, but this comes at a time when EU resources are already under pressure and competing priorities are increasing. Rather than pursuing strategic autonomy across every sector simultaneously, the EU may need to prioritise areas where reducing dependencies is both achievable and strategically important. A more selective approach could allow Brussels to focus resources where they can have the greatest impact, while recognising the practical limits of reshaping complex global supply chains.

COMMENTARY

India expands trade defences with new duties on strategic chemical imports

India has imposed a five-year anti-dumping duty on imports of insoluble sulphur from China, the EU, and the US, following an investigation by the Directorate General of Trade Remedies (DGTR). The measure aims to address concerns that exporters were selling the chemical below normal market value, creating pricing pressure for domestic producers.

Insoluble sulphur is a key input for the rubber and tyre industries, and the duty is intended to provide greater protection for Indian manufacturers while supporting domestic capacity growth. The move forms part of a broader expansion of India’s trade defence measures, with similar actions taken in recent months across chemicals, metals, and other industrial sectors.

The decision reflects a broader global trend of governments using anti-dumping measures to address perceived market distortions. While such measures can support local industries in the short term, they also highlight the growing use of trade policy as countries seek to balance industrial competitiveness, supply chain resilience, and open markets.

The Eurasia Dispatch Take: One implication is that the move supports the EU’s argument that concerns over Chinese industrial mass production are not limited to Europe but are part of a broader international concern. Another notable point is that India has repeatedly introduced or considered trade defence measures targeting Chinese products, yet Beijing’s response appears more limited than the reactions to EU measures, where discussions of possible trade escalation have been more prominent.

The reasons for this difference are likely complex, ranging from economic ties and political considerations to the specific sectors involved. Nevertheless, India’s approach may offer useful lessons for the EU on designing industrial protection measures that address competitiveness concerns while minimising unnecessary disruption to broader economic relations.

BEFORE YOU GO

Trade talks and economic statecraft have shaped the Eurasian discourse over the past weeks. Developments on these fronts will reverberate across global politics, trade, and defence. If you are interested in how these processes evolve, stay tuned for further updates in the next issue of Eurasia Dispatch! Thank you for reading, and we’d love to hear your thoughts—feel free to share your insights and feedback.

Until next time,

Eurasia Dispatch

Disclaimer: I manage this Substack account independently, in my personal capacity. The views expressed are my own and do not represent the views of my affiliated institutions.

Welcome to the latest issue of the newsletter! As always, there is a lot to unpack, so let’s get down to business.

This week, Eurasia Dispatch covers:

• Institutions

  • EU leaders seek stronger China trade tools while keeping dialogue open

• Member states

  • Merz raises exchange rate concerns as EU debate over China trade intensifies

• Business

  • EU considers additional duties on Chinese hybrid vehicles amid trade deficit concerns

• Commentary

  • From individual measures to a broader framework for EU economic security

INSTITUTIONS

EU leaders seek stronger China trade tools while keeping dialogue open

EU leaders have asked the European Commission to examine new trade defence measures as concerns grow over China’s industrial capacity, subsidies and rising exports into the European market. The decision reflects increasing support among member states for strengthening the EU’s economic security approach, although leaders stopped short of approving immediate new restrictions.

During the Brussels summit, discussions focused on expanding the EU’s existing toolbox and assessing how current instruments could be used more effectively. Leaders also stressed the importance of continued engagement with Beijing, with Chinese Commerce Minister Wang Wentao expected in Brussels later this month for talks with EU Trade Commissioner Maros Sefcovic.

The debate highlights a growing tension within the bloc between reducing economic dependencies and maintaining commercial ties with China. While countries including Germany have shown greater openness towards tougher measures, others remain cautious about escalation and potential retaliation. The Commission will now assess possible options, a process expected to take time before any new instruments are introduced.

The Eurasia Dispatch Take: Expectations ahead of the summit were high, with some observers anticipating that EU leaders would provide a clearer direction on the bloc’s future approach to China. Instead, the outcome focused largely on further assessment and preparation of possible measures rather than immediate policy decisions. The next steps, including Chinese Commerce Minister Wang Wentao’s reported visit to Brussels, may provide additional indications of the direction of EU-China economic relations. A successful establishment of a trade and investment consultation mechanism would represent a significant development, signalling that both sides are prioritising structured dialogue and dispute management. Such a mechanism could help create channels for addressing differences and reduce the risk of further escalation in trade relations.

MEMBER STATES

Merz raises exchange rate concerns as EU debate over China trade intensifies

German Chancellor Friedrich Merz has introduced currency policy into the EU’s growing debate over economic relations with China, arguing that the renminbi is significantly undervalued and contributes to China’s export competitiveness. Speaking after the European Council summit, Merz linked the exchange rate issue with broader concerns over subsidies, industrial mass production and Europe’s widening trade deficit with China.

His comments add another dimension to ongoing discussions in Brussels over trade defence measures, supply chain resilience and industrial competitiveness. Merz referenced the 1985 Plaza Accord as an example of international coordination on currency issues, though the comparison has prompted debate given the different economic circumstances today.

The exchange rate argument comes amid wider European manufacturing pressures, including high energy costs, slower investment and waning competitiveness in sectors such as automotive and clean technology. The discussion highlights the broader question of whether Europe’s industrial challenges should primarily be addressed through external trade measures or domestic competitiveness policies.

The Eurasia Dispatch Take: Germany has traditionally taken a more cautious approach towards a tougher China policy. Merz’s recent comments may indicate a shift in Berlin’s positioning, although it remains unclear whether this reflects a lasting policy adjustment or short-term political signalling. China remains a major trading partner for Germany and a significant source of investment, creating incentives for Berlin to balance economic concerns with broader strategic considerations.

If the remarks are followed by more measured messaging, they could represent an attempt to strengthen Germany’s negotiating position while maintaining engagement. However, if they reflect a broader change in policy direction, they could signal increasing alignment among EU member states around stricter economic measures towards China and contribute to further tensions in the relationship.

BUSINESS

EU considers additional duties on Chinese plug-in hybrid vehicles amid trade deficit concerns

The European Commission is reportedly preparing to impose potential countervailing duties on Chinese plug-in hybrid vehicles, according to the German newspaper Handelsblatt, citing EU officials and industry sources. The measures could be introduced once a majority of EU member states approve the proposal, although the Commission has not commented on the report.

The possible tariffs would target vehicles from Chinese manufacturers, including BYD, Chery, and SAIC, and would expand the EU’s existing trade measures on Chinese electric vehicle imports introduced in 2024.

The move comes as EU leaders discuss additional measures to address concerns over the bloc’s growing trade deficit with China and reliance on Chinese suppliers for strategic goods, including rare earths. The discussions form part of a wider EU review of its economic relationship with Beijing, with trade defence instruments becoming a central element of the bloc’s approach.

The Eurasia Dispatch Take: The potential move carries several implications. First, it could add further strain to EU-China economic relations, which are already facing increased tensions over trade and industrial policy. Second, it may have consequences for European consumers. The popularity of Chinese electric vehicles has partly been driven by competitive pricing, meaning additional duties could increase costs for buyers rather than directly addressing the underlying competitiveness gap faced by European manufacturers.

Third, targeting plug-in hybrids may only address part of the challenge. Chinese manufacturers have previously adapted to EU trade measures by shifting their market focus, including from battery electric vehicles towards plug-in hybrids after the introduction of EV tariffs in 2024. A similar adjustment in response to new measures could limit their effectiveness and require the EU to consider broader long-term strategies.

COMMENTARY

From individual measures to a broader framework for EU economic security

In a research paper, Andrew Small, director of the Asia programme at the European Council, argues that the EU’s current approach to China has been too fragmented, with responses often focused on individual sectors or specific trade issues. He suggests that the bloc should move towards a broader framework for single-market access based on transparency, reciprocity and resilience.

Small proposes six principles covering areas such as fair competition, supply-chain diversification, security standards for critical infrastructure, corporate transparency and restrictions on firms linked to security concerns. He argues that these rules should apply broadly rather than target China specifically, while addressing challenges associated with China’s industrial policy and growing role in strategic sectors.

According to Small, a more coordinated approach would allow the EU to use existing tools more effectively, reduce vulnerabilities and strengthen its negotiating position while keeping channels for dialogue open.

The Eurasia Dispatch Take: Small’s proposals highlight the potential benefits of a more comprehensive EU approach compared with the current sector-by-sector response. A broader framework could help the EU address external dependencies more consistently, regardless of whether they involve China, Russia or other partners. However, designing country-neutral policies presents practical challenges, as different external actors generate different risks and may require differentiated policy tools.

A second challenge concerns maintaining engagement with China while strengthening economic security measures. A more structured approach could create friction with Beijing if it is perceived as disproportionately targeting Chinese firms, even as both sides remain economically interdependent and reliant on continued dialogue.

An additional consideration is the impact on European consumers and firms. Some of the measures implied in Small’s framework, including higher compliance costs and trade restrictions, could feed through into prices and competitiveness. This matters in a context where European consumers often face a choice between higher-cost domestic products and lower-cost imports. As Small notes, these trade-offs may be unavoidable but would need to be managed through broader policy support and sequencing.

BEFORE YOU GO

The European Council, new potential tariffs, and the EU’s economic security regulatory drive have shaped the Eurasian discourse over the past weeks. Developments on these fronts will reverberate across global politics, trade, and defence. If you are interested in how these processes evolve, stay tuned for further updates in the next issue of Eurasia Dispatch! Thank you for reading, and we’d love to hear your thoughts—feel free to share your insights and feedback.

Until next time,

Eurasia Dispatch

Disclaimer: I manage this Substack account independently, in my personal capacity. The views expressed are my own and do not represent the views of my affiliated institutions.

Welcome to the latest issue of the newsletter! As always, there is a lot to unpack, so let’s get down to business.

This week, Eurasia Dispatch covers:

• Institutions

  • China-EU trade tensions and the search for a dialogue mechanism

• Member states

  • Belgium pushes for stronger China strategy

• Business

  • EU chemicals sector faces growing pressure, Brussels considers response to Chinese imports

• Commentary

  • Battery industry expert outlines Europe’s path to narrowing the gap with China

INSTITUTIONS

China-EU trade tensions and the search for a dialogue mechanism

China-EU economic relations are sending mixed signals, with both sides maintaining dialogue while tensions over trade and industrial policy continue to rise. Beijing has moved ahead with discussions to establish a China-EU Trade and Investment Consultation Mechanism, with Chinese Vice Commerce Minister Ling Ji visiting Brussels to discuss the framework’s arrangements. Further high-level talks are also expected.

At the same time, reports that China cancelled two planned meetings with EU officials highlight the uncertainty surrounding the relationship. The developments suggest that while both sides see value in maintaining communication channels, political and economic disagreements are affecting the pace and format of engagement.

For the EU, dialogue is taking place alongside efforts to strengthen trade defence tools and reduce strategic dependencies. For China, consultation mechanisms offer a way to address disputes without escalation. The challenge will be whether these channels can deliver practical results as both sides continue to adjust their broader economic strategies.

The Eurasia Dispatch Take: These signals come shortly before the upcoming EU leaders’ meeting, where China policy is expected to be among the issues discussed. The current picture reflects a combination of tougher public rhetoric and continued indications that both sides remain open to dialogue.

It is unclear whether the leaders’ meeting will provide greater clarity on the EU’s overall direction, as member states continue to balance economic interests, security concerns, and the need to engage with Beijing.

The lack of a consistent message may complicate the EU’s efforts to strengthen its position in relations with China. A clearer and more predictable approach is imperative if the bloc aims to be viewed as a more influential partner in negotiations and policy discussions.

MEMBER STATES

Belgium pushes for stronger China strategy

Belgian Prime Minister Bart De Wever has called for a more coordinated EU strategy towards China, arguing that the bloc needs to address growing concerns over industrial competition, trade imbalances and economic dependencies. Speaking ahead of upcoming EU discussions on China, De Wever said Europe needed to move beyond individual initiatives and develop a clearer long-term approach, including stronger use of trade defence tools, supply chain diversification and improved market access for European companies in China.

His comments come as EU leaders debate how to respond to Chinese industrial capacity and rising exports in sectors such as electric vehicles, clean technology and manufacturing. De Wever argued that Europe should avoid both excessive protectionism and subsidy competition, while focusing on resilience and economic security.

Chinese state media criticised the remarks, arguing that some European policymakers are framing normal economic competition as a security issue. The commentary also highlighted continued business ties between China and Europe, noting that many European companies remain active in the Chinese market.

The Eurasia Dispatch Take: One of the main obstacles to a more coherent EU China strategy has been internal divisions among member states. However, recent developments suggest that these differences may be narrowing, with a French-led policy paper receiving support from several countries and Germany signalling greater openness to stronger trade measures ahead of upcoming EU discussions.

A more assertive approach from the EU would likely face opposition from Beijing, but greater consistency may provide a clearer basis for managing the relationship. The current situation, where EU institutions advocate a tougher stance while member states send mixed signals, has created uncertainty. Spain’s initial support for the French-led initiative, followed by later distancing from it, illustrates these internal tensions.

A more defined EU position, even if more cautious or restrictive, could eventually provide a clearer framework for dialogue. Over time, a more stable foundation may allow both sides to address differences and rebuild cooperation on agreed terms.

BUSINESS

EU chemicals sector faces growing pressure, Brussels considers response to Chinese imports

The European Commission is exploring new measures to support the EU chemicals industry as producers face rising competition from Chinese imports and concerns over industrial mass production. EU leaders are expected to discuss possible responses at the 18–19 June summit, including stronger trade defence tools and potential sector-wide measures.

The pressure comes as several European chemical producers report declining competitiveness, with industry groups citing capacity reductions and job losses across the sector. China’s expanding chemical production, combined with lower energy costs and different regulatory conditions, has intensified competition in areas such as plastics and basic chemicals.

Brussels is considering options ranging from safeguards and targeted tariffs to a broader ‘overcapacity instrument’. However, these measures could take significant time to develop and implement. The debate also reflects wider EU discussions on economic security, as policymakers seek to balance industrial resilience, trade relations with China and the interests of European companies operating in the Chinese market.

The Eurasia Dispatch Take: The discussion around industry-wide protection indicates movement away from fragmented, product-specific measures towards more comprehensive tools targeting wider sectors. The rationale behind strengthening industrial resilience is clear, particularly in strategic industries. However, the effectiveness of such measures depends on whether they can achieve their objectives without significantly worsening EU-China economic relations. Beijing has consistently favoured dialogue over unilateral trade actions and may respond to broader restrictions with countermeasures. The challenge for the EU will be finding a balance between supporting European industry, reducing vulnerabilities and maintaining channels for economic cooperation with China.

COMMENTARY

Battery industry expert outlines Europe’s path to narrowing the gap with China

Ilka von Dalwigk, Director General of industry alliance ReCharge, argues that Europe still has a path to building a competitive battery sector, but only if it addresses manufacturing challenges and creates stronger policy support. Speaking at The Battery Show Europe, she highlighted that more than 700 GWh of planned gigafactory capacity has been delayed, reduced or cancelled over the past 18 months due to scaling difficulties and weaker electric vehicle demand.

According to von Dalwigk, Europe can narrow the gap with China through a combination of innovation, targeted industrial support and stronger demand incentives. She pointed to initiatives such as the €1.5 billion Battery Booster Facility and the proposed Industrial Accelerator Act, which could support early production and introduce “Made in Europe” preferences for certain battery components.

She assesses that Europe’s challenge is not only increasing capacity, but also improving efficiency, developing technology and creating a more predictable investment environment while maintaining international cooperation.

The Eurasia Dispatch Take: Closing the gap with China may be achievable in certain areas, but matching Beijing across every sector where it chooses to compete will be difficult given China’s long-term industrial planning, manufacturing scale and state capacity. A more sustainable approach may therefore be for Europe to focus on strengthening its own comparative advantages rather than attempting to replicate China’s model. Instead of treating industrial policy purely as a race, policymakers could prioritise sectors where Europe has existing strengths and can build strategic value. The objective may be less about competing on China’s terms and more about developing areas where Europe becomes difficult to replace. Creating strategic indispensability could offer a more realistic path than attempting to transform Europe into a competitor in every field.

BEFORE YOU GO

Trade tensions and battery ambitions have shaped the Eurasian discourse over the past weeks. Developments on these fronts will reverberate across global politics, trade, and defence. If you are interested in how these processes evolve, stay tuned for further updates in the next issue of Eurasia Dispatch! Thank you for reading, and we’d love to hear your thoughts—feel free to share your insights and feedback.

Until next time,

Eurasia Dispatch

Disclaimer: I manage this Substack account independently, in my personal capacity. The views expressed are my own and do not represent the views of my affiliated institutions.

Welcome to the latest issue of the newsletter! As always, there is a lot to unpack, so let’s get down to business.

This week, Eurasia Dispatch covers:

• Institutions

  • EU explores new supply chain diversification tool

• Member states

  • Franco-German push gives momentum to EU enlargement

• Business

  • EU launches new anti-dumping investigations into Chinese industrial imports

• Commentary

  • The case for G7 alignment on China trade pressures

INSTITUTIONS

EU explores new supply chain diversification tool

EU Trade Commissioner Maros Sefcovic has proposed the creation of a dedicated diversification instrument aimed at reducing dependence on single suppliers in strategically important sectors, including semiconductors and rare earths. Speaking at the Brussels Economic Security Forum, Sefcovic argued that Europe should adopt a more systematic approach to supply-chain resilience, drawing parallels with the Energy Union initiative launched after concerns over reliance on Russian energy supplies.

The proposal comes as the EU reassesses economic vulnerabilities exposed by recent disruptions in critical supply chains. European concerns have intensified following Chinese export controls on rare earths and restrictions affecting semiconductor-related supply networks. Brussels remains heavily dependent on China for many critical raw materials, particularly rare earth elements.

Sefcovic suggested that critical sectors should avoid reliance on a single source of supply and indicated that the Commission is considering how such a framework could be translated into legislation. The initiative also forms part of a broader discussion within the EU on economic security, industrial competitiveness and trade relations with China. Discussions are expected to continue ahead of the June European Council summit and during upcoming meetings between EU and Chinese trade officials.

The Eurasia Dispatch Take: China is unlikely to welcome this direction of travel, particularly as it follows other EU initiatives such as the proposed European Technological Sovereignty Package, which reportedly aims to strengthen domestic technological capabilities and reduce dependence on both American and Chinese suppliers.

From Brussels’ perspective, efforts to bolster industrial competitiveness, technological capacity and supply-chain resilience are increasingly tied to economic security objectives. However, the policy narrative accompanying these initiatives remains less developed than the measures themselves. As the EU introduces new instruments and industrial strategies, it faces the challenge of explaining their purpose and long-term objectives to external partners.

Clear communication will be important in distinguishing diversification and resilience-building from broader economic disengagement. Without a coherent narrative, measures designed to reduce strategic vulnerabilities may instead be interpreted as exclusionary or confrontational, increasing the risk of misunderstandings, diplomatic friction and retaliatory responses from affected partners.

MEMBER STATES

Franco-German push gives momentum to EU enlargement

EU leaders used the EU-Western Balkans summit in Montenegro to signal renewed support for enlargement, with France and Germany emerging as key advocates of a more dynamic accession process. German Chancellor Friedrich Merz and French President Emmanuel Macron backed a Franco-German initiative that would offer candidate countries earlier access to selected EU structures and benefits, including observer status in EU bodies, participation in EU programmes and closer economic integration before full membership.

European Commission President Ursula von der Leyen described enlargement as a geostrategic priority, arguing that a faster and more credible accession process would strengthen the EU’s long-term security and stability. Similar arguments were echoed by European Council President Antonio Costa, who characterised enlargement as a strategic investment in Europe’s future.

The debate reflects a broader shift in how enlargement is being framed within the EU. Beyond governance reforms and economic convergence, accession is increasingly linked to geopolitical competition and efforts to strengthen Europe’s influence in neighbouring regions. Several European leaders pointed to the need to reduce external vulnerabilities and prevent strategic vacuums that could be filled by other powers, particularly Russia and China.

The Eurasia Dispatch Take: Within this context, the Western Balkans are increasingly being viewed not only as future EU members but also as part of a broader European security and economic strategy. Supporters of enlargement can argue that expanding the Union could increase its economic weight, strengthen regional stability and extend the reach of the single market.

At the same time, enlargement raises questions about the EU’s institutional capacity and decision-making processes. The Union already faces challenges in forging consensus among its current members on major foreign policy and economic issues, particularly where unanimity is required. Adding new member states could increase the complexity of negotiations and further diversify national interests within the bloc.

As a result, while the economic and strategic rationale for enlargement is increasingly prominent in EU discussions, debate continues over how expansion would affect the Union’s ability to act cohesively and efficiently. Whether enlargement ultimately strengthens the EU’s geopolitical influence may depend not only on the number of member states, but also on the effectiveness of its decision-making structures.

BUSINESS

EU launches new anti-dumping investigations into Chinese industrial imports

The European Commission has opened two new anti-dumping investigations targeting imports from China, highlighting Brussels’ continued use of trade-defence instruments in response to concerns raised by European industry.

The first investigation covers welded steel mesh imported from China and Türkiye. The probe follows a complaint by the European Welded Steel Mesh Producers Association, which alleged that exporters were selling the product in the EU at unfairly low prices. Welded steel mesh is widely used in the construction sector to reinforce concrete structures.

The second investigation concerns the import of certain aliphatic-aromatic copolyesters, a type of biodegradable plastic commonly used in compostable packaging and agricultural applications. The case was initiated following a complaint from German chemical group BASF, which argued that growing imports from China had adversely affected the EU market.

In both cases, the Commission will examine whether imports were dumped and whether they caused material injury to European producers. The investigations cover the period from 1 January to 31 December 2025 and could eventually lead to the imposition of anti-dumping duties if the allegations are confirmed.

The Eurasia Dispatch Take: The two investigations add to a growing list of Chinese products that have been subject to EU anti-dumping measures or trade-defence probes, including electric vehicles, tyres and ceramics. Taken together, they suggest that the EU’s de-risking agenda continues to expand, supported by an increasingly active use of trade-defence instruments and the development of new economic security tools.

Brussels argues that these measures are necessary to address what they see as market distortions, industrial overcapacity, and strategic dependencies. At the same time, questions remain about the longer-term objectives of this approach. While policymakers frequently point to trade imbalances and concerns about industrial competitiveness, it remains unclear what level of rebalancing would be considered sufficient or how progress will ultimately be measured.

The broader direction of policy is becoming clearer, but the desired end state is less well defined. As the EU continues to introduce new instruments, greater narrative clarity on strategic objectives and expected outcomes may become increasingly important for both European stakeholders and international partners.

COMMENTARY

The case for G7 alignment on China trade pressures

Writing in an opinion piece, Alicia Garcia-Herrero argues that the European Union is moving towards a more comprehensive response to what it sees as the challenges posed by Chinese industrial overcapacity. According to her analysis, recent discussions within the European Commission indicate growing support for expanding the EU’s trade defence toolkit beyond sector-specific investigations towards broader instruments to address cross-sector competitive pressures.

Garcia-Herrero contends that Brussels views existing trade imbalances and the increasing global market share of Chinese exports as evidence of structural challenges requiring policy action. She also notes that China has developed legal and regulatory mechanisms that could be used to respond to future EU measures, increasing the potential for trade frictions.

The commentary highlights divisions among member states, with countries such as France advocating stronger action while others, including Germany and Spain, have adopted more cautious positions. García-Herrero argues that these differences could complicate implementation.

Rather than relying solely on EU-level measures, she advocates closer coordination with G7 partners on supply-chain resilience, critical technologies and trade defence policies. In her view, a coordinated approach would strengthen Europe’s position while preserving channels for dialogue with Beijing and avoiding a more fragmented response.

The Eurasia Dispatch Take: Coordination with like-minded partners is likely to remain an important component of the EU’s de-risking strategy. However, such efforts are expected to draw criticism from Beijing, which has consistently argued that economic interdependence with China should not be viewed as a security risk.

Recent EU discussions suggest that Brussels does not fully share this assessment and is increasingly focused on reducing vulnerabilities in strategically important sectors. The challenge for European policymakers will be to pursue diversification while avoiding the perception that de-risking is synonymous with economic containment.

As cooperation with G7 partners and other economies expands, the EU will need to demonstrate that its objective is to build more resilient supply chains, strengthen economic security and preserve fair competition, rather than to isolate China. It will also need to convince Beijing that a more resilient and economically secure Europe is ultimately a more stable and predictable partner than one that feels strategically vulnerable and increasingly concerned about external dependencies. How effectively Brussels communicates this distinction may influence both the trajectory of EU-China relations and the willingness of third countries to support its initiatives.

BEFORE YOU GO

Enlargement, anti-dumping investigations and broader trade defence tools have shaped the Eurasian discourse over the past weeks. Developments on these fronts will reverberate across global politics, trade, and defence. If you are interested in how these processes evolve, stay tuned for further updates in the next issue of Eurasia Dispatch! Thank you for reading, and we’d love to hear your thoughts—feel free to share your insights and feedback.

Until next time,

Eurasia Dispatch

Disclaimer: I manage this Substack account independently, in my personal capacity. The views expressed are my own and do not represent the views of my affiliated institutions.

Welcome to the latest issue of the newsletter! As always, there is a lot to unpack, so let’s get down to business.

This week, Eurasia Dispatch covers:

• Institutions

  • EU signals China recalibration as Beijing warns against new trade measures

• Member states

  • Germany and Spain navigate EU-China balancing act as trade debate intensifies

• Business

  • Chinese firms face intensifying EU regulatory scrutiny

• Commentary

  • China state media warns against emerging EU trade defence push

INSTITUTIONS

EU signals China recalibration as Beijing warns against new trade measures

The European Commission began a broader review of EU-China economic relations during an orientation debate among commissioners on 29 May, signalling growing concern over trade imbalances, industrial competitiveness and economic security. While no concrete measures were adopted, the discussion will inform further deliberations at the G7 summit in mid-June and the European Council later that month.

Following the meeting, the Commission described China as a critical partner. Still, it stated that the current trade and investment relationship is not sustainable and requires a more robust and coherent response. Officials stressed that dialogue with Beijing would continue while efforts to address concerns over market access, mass production and reciprocity advance.

The debate took place amid increasing calls from some member states and industrial sectors for stronger trade defence measures. At the same time, divisions remain within the EU over how far such measures should go and how to balance economic security concerns with commercial interests.

China reacted strongly to the discussions. Beijing warned against the introduction of new trade instruments or discriminatory restrictions targeting Chinese firms and products, stating that it would take countermeasures if its interests were affected. Chinese officials nevertheless indicated that communication continues and that both sides are exploring the creation of a trade and investment consultation mechanism.

The Eurasia Dispatch Take: The direction of travel appears increasingly clear. The EU is likely to continue pursuing its de-risking agenda and may gradually expand it from sector-specific investigations and trade defence measures towards broader industrial and economic security policies.

What remains less certain is how these ambitions will be implemented. Many of the proposed initiatives require significant public and private investment at a time when fiscal resources are constrained, and member states have differing economic priorities. Questions also remain about which sectors can continue to support meaningful EU-China cooperation despite growing competition.

At the same time, sustained dialogue between Brussels and Beijing suggests that both sides continue to see value in managing disagreements through engagement. While public debate has increasingly focused on risk reduction, resilience and economic security, less attention has been given to identifying areas where cooperation could remain mutually beneficial.

MEMBER STATES

Germany and Spain navigate EU-China balancing act as trade debate intensifies

Germany and Spain have adopted nuanced positions as the European Union debates a tougher approach towards China, highlighting the challenges of building a unified policy among member states.

Germany initially did not support a French-led non-paper backed by Italy, the Netherlands and Lithuania that called for stronger EU trade defence measures against Chinese overcapacity and market distortions. At the same time, German Economy Minister Katherina Reiche travelled to China with a delegation of around 40 business representatives to discuss industrial cooperation, market access and investment. Berlin continues to view China as a critical economic partner, with bilateral trade reaching approximately €210 billion in 2025 and thousands of German firms active in the Chinese market.

However, Germany’s position appears to be evolving. Recent reporting suggests that Berlin is now willing to discuss stronger EU trade defence instruments, including measures to address industrial overcapacity. This shift comes amid growing concerns about competitive pressures facing key German industries and the widening EU-China trade imbalance.

Spain has followed a similarly cautious path. Although Madrid was initially listed among the signatories of the French-led proposal, Economy Minister Carlos Cuerpo later clarified that Spain had not provided political endorsement of the document. Spanish officials instead emphasised continued engagement with Beijing while supporting efforts to address trade imbalances and economic security concerns.

The Eurasia Dispatch Take: The developments highlight the balancing act facing both Germany and Spain as they seek to preserve economic ties with China while participating in broader EU discussions on trade defence, competitiveness and economic security. Both countries appear to be navigating between national economic interests and growing pressure within Brussels for a more assertive approach towards Beijing.

The episode also illustrates the challenges the EU faces in developing a coherent China policy. Differences among member states continue to shape the debate, while institutional messaging has occasionally appeared inconsistent. Following a meeting of commissioners on the future of EU-China relations, an initial Commission readout stated that engagement and dialogue with China would continue and that communication channels would remain open. A subsequent version removed the reference to communication channels, with the change attributed to a drafting error.

Such episodes underscore the difficulty of aligning policy positions across the EU’s institutions and member states. As Brussels seeks to recalibrate its economic relationship with China, the effectiveness of any future strategy will depend not only on the measures adopted but also on the consistency of the signals sent to external partners. Greater clarity on long-term objectives may be necessary if the EU is to advance a sustainable framework for managing economic relations with Beijing.

BUSINESS

Chinese firms face intensifying EU regulatory scrutiny

Two prominent Chinese companies are facing growing regulatory challenges in the European Union, highlighting a stricter regulatory environment for Chinese businesses operating in the bloc.

The European Commission has opened an in-depth investigation into JD.com’s proposed €2.2 billion acquisition of German electronics retailer Ceconomy under the EU’s Foreign Subsidies Regulation. Brussels said preliminary findings suggest the company may have benefited from forms of state support, including financing, tax incentives and grants, which could have influenced the acquisition process and potentially affected competition within the EU market. The investigation will examine whether these advantages distorted bidding conditions or could strengthen the merged entity’s market position.

Separately, the Commission fined Temu €200 million under the Digital Services Act, concluding that the platform had not done enough to address risks associated with illegal products being sold to European consumers. Temu has disputed the decision and said it has strengthened its compliance and consumer protection systems.

The Eurasia Dispatch Take: The two cases illustrate how EU scrutiny of Chinese companies is expanding beyond traditional trade disputes into areas such as investment screening, competition policy, consumer protection and digital regulation. Some firms appear more exposed to this trend than others. Over the past year, companies including Huawei, CRRC, BYD, Shein and AliExpress have also faced increased regulatory attention across different sectors.

While heightened oversight can create additional compliance costs and operational challenges, it also reflects the EU’s effort to establish clearer rules for participation in its market. As economic security concerns become more prominent in EU policymaking, regulatory scrutiny is likely to remain a feature of the business environment. Over time, a more predictable framework could provide greater clarity for both sides. If regulatory expectations become better defined and companies are able to demonstrate compliance with them, this may contribute to a more stable and structured basis for EU-China commercial relations.

COMMENTARY

China state media warns against emerging EU trade defence push

A commentary published by China’s state-run Global Times criticised recent efforts by a group of EU member states to advocate stronger trade defence measures ahead of the European Commission’s discussion on China policy. The article argued that concerns over Chinese mass production and Europe’s widening trade deficit with China misrepresent the nature of the bilateral economic relationship and overlook the role of Chinese goods in supporting European industrial competitiveness.

The commentary maintained that trade imbalances do not necessarily indicate unfair competition, highlighting the contribution of Chinese intermediate goods to European manufacturing and citing examples of industrial cooperation in sectors such as electric vehicles. It also pointed to Europe’s services trade surplus with China and argued that structural challenges facing European industry stem primarily from domestic factors, including energy costs, regulatory burdens and slower innovation.

The article further warned that any move towards broader trade restrictions could damage economic ties and provoke countermeasures from Beijing. While acknowledging differences within the EU over China policy, it urged policymakers to prioritise dialogue and cooperation over the adoption of new trade defence instruments, presenting economic engagement as the preferred path for managing bilateral disputes.

The Eurasia Dispatch Take: Europe appears increasingly committed to its de-risking and economic rebalancing agenda, even in the face of criticism and threats. A plausible, least damaging path forward is a gradual restructuring of trade relations that avoids uncontrolled escalation while addressing concerns on both sides. Achieving that outcome will require sustained dialogue and a willingness from both Brussels and Beijing to engage with each other’s economic and security priorities.

In this context, Chinese Commerce Minister Wang Wentao’s forthcoming visit to Brussels could provide an opportunity to advance discussions and explore areas of compromise. However, policy debates and consultations are still scheduled within the EU before then, many of which are focused on trade defence, economic security and strategic dependencies. As these discussions unfold, they may add further strain to the relationship and complicate efforts to stabilise EU-China ties in the near term.

BEFORE YOU GO

Trade defence measures, member state pivots and regulatory scrutiny have shaped the Eurasian discourse over the past weeks. Developments on these fronts will reverberate across global politics, trade, and defence. If you are interested in how these processes evolve, stay tuned for further updates in the next issue of Eurasia Dispatch! Thank you for reading, and we’d love to hear your thoughts—feel free to share your insights and feedback.

Until next time,

Eurasia Dispatch

Disclaimer: I manage this Substack account independently, in my personal capacity. The views expressed are my own and do not represent the views of my affiliated institutions.

Welcome to the latest issue of the newsletter! As always, there is a lot to unpack, so let’s get down to business.

This week, Eurasia Dispatch covers:

• Institutions

  • Member states move to push Commission for stronger EU trade defences

• Member states

  • EU leverages German industrial pressure to push stronger trade measures against China

• Business

  • Sandoz pushes EU to investigate Chinese antibiotic imports

• Commentary

  • A deep dive into the Industrial Accelerator Act over trade and competitiveness risks

INSTITUTIONS

Member states move to push Commission for stronger EU trade defences

France, alongside the Netherlands, Spain, Italy, and Lithuania, is seeking to build support within the EU for a more assertive trade policy to address concerns about industrial competitiveness and strategic dependencies on China. In a joint policy non-paper circulated ahead of a European Commission debate on China strategy, the group called for broader trade defence instruments and faster deployment of measures such as tariff quotas and safeguard mechanisms.

The initiative reflects growing pressure within parts of the EU to respond more strongly to what officials describe as unfair trade practices, industrial overcapacity, and vulnerabilities in critical supply chains. The proposals come as Brussels prepares broader discussions on long-term economic strategy toward China, with trade deficits and industrial decline increasingly shaping the debate.

However, divisions within the bloc remain visible. Germany and Poland have not joined the initiative, underlining differing national approaches toward economic relations with Beijing.

Global Times criticised the proposals, arguing that the EU is attributing its industrial challenges to external competition rather than domestic structural issues. Beijing also warned that additional restrictive measures could damage bilateral trade relations and provoke countermeasures.

The Eurasia Dispatch Take: The proposals reflect an increasingly firm tone ahead of the European Commission’s upcoming discussions on China policy and suggest that the EU’s de-risking agenda remains far from finished.

At the same time, differences among member states continue to shape the debate. Germany may prove difficult to fully align behind tougher measures, given its deep economic exposure to China and continued Chinese investment in the country. Poland, by contrast, is often viewed as adopting a more cautious approach toward economic relations with Beijing, potentially making it more receptive to stronger trade defence policies.

Overall, the discussions indicate that support for a more assertive EU economic strategy toward China is broadening within parts of the bloc, pointing to continued adjustments in EU-China economic relations ahead.

MEMBER STATES

EU leverages German industrial pressure to push stronger trade measures against China

Germany’s manufacturing sector is under increasing strain from rising Chinese exports, particularly in the automotive, machinery, chemicals, and aircraft industries. In 2025, China’s overall export growth more than doubled the pace of global trade, with early 2026 trends indicating continued expansion. German firms face competition both at home and abroad, while domestic fiscal measures risk being offset by higher imports from China.

The European Commission is seeking to leverage this industrial pressure to advance a more assertive trade defence agenda. Plans include a targeted overcapacity instrument aimed at state-subsidised Chinese goods, alongside case-by-case trade measures to protect critical sectors. Commissioners are set to debate proposals on 29 May, with EU leaders reviewing them at the European Council on 18–19 June. The strategy relies on Germany’s recognition of its industrial vulnerability to secure political support for broader EU-level action, while maintaining compliance with World Trade Organization rules.

The Eurasia Dispatch Take: Member state unity is central to shaping an effective EU policy toward China. While leveraging internal pressures to achieve cohesion may be seen as contentious, it remains one of the few tools available to coordinate action. However, unity alone is insufficient. The EU also needs a coherent, long-term economic strategy rather than a patchwork of fragmented measures. Currently, policy efforts appear scattered, lacking an overarching framework to address structural challenges. Pressuring Germany may signal intent and align priorities, but it will not resolve deeper economic challenges. In this context, member state cohesion is a necessary foundation, but it must be complemented by consistent, long-term planning and implementation to produce meaningful results in managing EU-China economic relations.

BUSINESS

Sandoz pushes EU to investigate Chinese antibiotic imports

Generic drug manufacturer Sandoz has urged the European Commission to investigate Chinese imports of amoxicillin trihydrate, a key ingredient used in one of Europe’s most widely prescribed antibiotics. In a complaint submitted in March, the Swiss company alleged that Chinese producers benefit from significant state support and sell the ingredient at artificially low prices, undermining European manufacturers.

Sandoz argued that the price gap has made domestic production increasingly difficult and warned that Europe could become more dependent on Asian suppliers for essential pharmaceutical ingredients. According to healthcare data provider IQVIA, around 80 per cent of active pharmaceutical ingredients used in amoxicillin production are already imported from Asia.

The company called on Brussels to introduce corrective measures, including possible anti-dumping duties, to protect supply resilience and maintain pharmaceutical manufacturing capacity within the EU. The European Commission has not yet decided whether to launch a formal investigation.

The Eurasia Dispatch Take: The dispute adds pharmaceuticals to a growing number of sectors where European companies and policymakers have expressed concerns about industrial overcapacity, subsidies, and strategic dependencies linked to China. It also highlights how supply security considerations are increasingly shaping EU trade and industrial policy discussions.

The Commission’s response to the complaint could become an important indicator of how far Brussels is prepared to extend its de-risking agenda into additional strategic sectors beyond clean technology and critical raw materials. While the long-term direction of EU policy remains uncertain, a decision to proceed with a formal investigation would suggest that the bloc continues to prioritise supply chain resilience and industrial protection measures as part of its broader economic strategy toward China.

COMMENTARY

A deep dive into the Industrial Accelerator Act over trade and competitiveness risks

A new policy analysis from Bruegel has raised concerns about aspects of the EU’s proposed Industrial Accelerator Act (IAA), a flagship initiative designed to strengthen European clean industry and reduce dependence on foreign supply chains. The legislation, introduced by the European Commission in March 2026, aims to boost demand for EU-made low-carbon technologies through public procurement rules, subsidy conditions, and investment screening measures.

The paper argues that several provisions could create economic and legal challenges if implemented without revision. It questions the rationale behind the target of raising manufacturing to 20 per cent of EU GDP by 2035, warning that such objectives could distort investment decisions and redirect resources inefficiently across the economy.

The analysis also highlights concerns over “Made in EU” procurement preferences and origin-based subsidy conditions, which critics argue could increase costs, slow decarbonisation efforts, and expose the EU to challenges at the World Trade Organization. The report notes that China has already criticised parts of the proposal as discriminatory and warned of possible countermeasures.

At the same time, the paper supports the EU’s broader objective of strengthening industrial resilience and reducing strategic vulnerabilities. It recommends replacing strict local-content requirements with sustainability and resilience criteria, while maintaining openness to foreign investment that contributes to European production capacity and supply chains.

The Eurasia Dispatch Take: The analysis reflects growing debate within Europe over how to balance industrial competitiveness, strategic autonomy, and compliance with international trade rules. It also highlights the importance of detailed scrutiny as the Industrial Accelerator Act moves through the legislative process. In its current form, some provisions could create unnecessary trade frictions with China and potentially expose the EU to legal challenges under World Trade Organization rules. Such outcomes could complicate the bloc’s broader economic and diplomatic objectives.

While there is broad support in Europe for strengthening industrial resilience and reducing strategic vulnerabilities, it is important to reflect on how far protective measures should go. Policymakers are likely to face continued pressure to ensure that industrial policy supports long-term competitiveness without undermining market openness, investment flows, or cooperation with key economic partners.

BEFORE YOU GO

Trade defence measures and industrial policy have shaped the Eurasian discourse over the past weeks. Developments on these fronts will reverberate across global politics, trade, and defence. If you are interested in how these processes evolve, stay tuned for further updates in the next issue of Eurasia Dispatch! Thank you for reading, and we’d love to hear your thoughts—feel free to share your insights and feedback.

Until next time,

Eurasia Dispatch

Disclaimer: I manage this Substack account independently, in my personal capacity. The views expressed are my own and do not represent the views of my affiliated institutions.

Welcome to the latest issue of the newsletter! As always, there is a lot to unpack, so let’s get down to business.

This week, Eurasia Dispatch covers:

• Institutions

  • EU weighs new trade defence tools as China overcapacity debate intensifies

• Member states

  • Kallas warns against fragmentation as the EU shapes its China policy

• Business

  • Ming Yang explores European manufacturing as security concerns reshape renewable energy supply chains

• Commentary

  • ECB study and Chinese media commentary highlight diverging views on Europe’s industrial challenges

INSTITUTIONS

EU weighs new trade defence tools as China overcapacity debate intensifies

The European Union is preparing a new phase in its trade and industrial policy response to concerns over what it sees as Chinese overcapacity and growing economic dependencies. Internal European Commission discussions are focusing on stronger trade defence instruments, including potential safeguard investigations in additional sectors and the development of a new “overcapacity instrument” aimed at addressing the impact of heavily subsidised production in strategic industries.

According to the current regulatory timetable, the proposals are expected to be reviewed by EU commissioners at an orientation debate on 29 May, before being discussed by EU leaders at the G7 summit in mid-June and the European Council later that month. The discussions come amid wider debates over competitiveness, strategic autonomy and trade imbalances.

Particular attention is centred on the proposed overcapacity mechanism, which remains politically and legally sensitive. Officials reportedly view the instrument as potentially risky because it could face challenges under World Trade Organization (WTO) rules, especially provisions limiting country-specific discrimination. While safeguard investigations already exist under WTO frameworks, a dedicated overcapacity tool would represent a more significant evolution in EU trade policy.

The Eurasia Dispatch Take: The debate reflects broader shifts in EU-China economic relations, as Brussels advances measures linked to cybersecurity, industrial policy, and critical supply chains, while Beijing expands its own economic and legal response tools. China recently instructed domestic entities not to cooperate with an EU anti-subsidy investigation involving Chinese security firm Nuctech, marking the first use of regulations introduced in April to shield Chinese companies from what Beijing considers improper foreign interference. China’s justice ministry argued that the EU had requested “extensive and non-essential information” within China, describing the move as an example of unjustified extraterritorial jurisdiction.

The episode highlights how both sides are increasingly relying on defensive economic instruments as tensions broaden beyond tariffs into areas such as technology, investment screening, and regulatory enforcement. While the EU continues pursuing a de-risking strategy alongside efforts to maintain stable ties with China, managing the relationship without deeper economic fragmentation is becoming more difficult.

MEMBER STATES

Kallas warns against fragmentation as the EU shapes its China policy

EU foreign policy chief Kaja Kallas warned that major powers, including the United States, China, and Russia, prefer dealing with individual European states rather than a unified European Union. Speaking at the Lennart Meri Conference in Tallinn, Kallas argued that the EU carries greater geopolitical weight when acting collectively and cautioned member states against pursuing separate arrangements that could weaken the bloc’s common position.

Kallas said some countries had sought to maintain bilateral channels with Washington since the return of US President Donald Trump, but stressed that the EU should negotiate and coordinate through common institutions. She described external attempts to cultivate closer ties with individual member states as part of a broader effort to divide the bloc politically and economically.

On China, Kallas said the EU had reached a broad agreement on the nature of the challenges posed by economic dependencies and industrial competition, but remained divided over the appropriate response. She pointed to ongoing debates over subsidies, investment controls, procurement tools, and supply chain diversification, while acknowledging that stronger trade and industrial measures could trigger reciprocation. Her remarks reflect wider discussions within the EU over balancing economic openness with efforts to strengthen resilience and strategic autonomy.

The Eurasia Dispatch Take: In great power politics, international actors often seek to exploit divisions and vulnerabilities to advance their own interests. In that context, the EU’s challenge is to demonstrate that engagement with a united Europe offers greater long-term benefits than dealing with fragmented national positions. The scale of the EU single market, for example, provides leverage and economic opportunities that individual member states cannot easily replicate on their own. Likewise, transnational challenges such as climate change and nontraditional security challenges are more manageable through collective approaches than isolated national policies.

At the same time, the broader international climate has shifted away from the emphasis on multilateral problem-solving that characterised earlier decades. Economic security, strategic autonomy, and trade imbalances increasingly dominate political debates, contributing to more defensive and fragmented policy approaches. Recent developments in global trade and geopolitics suggest that tensions between major powers are likely to remain a defining feature of the international environment.

BUSINESS

Ming Yang explores European manufacturing as security concerns reshape renewable energy supply chains

Chinese wind turbine manufacturer Ming Yang Smart Energy is exploring potential manufacturing locations in Europe, including Spain, after plans for a major factory in Scotland stalled following UK security concerns over the use of Chinese turbines in offshore wind projects.

The company said it remains interested in building production capacity in Europe using a local workforce, but stressed that investment decisions depend on whether its turbines are permitted access to European markets. Ming Yang’s European leadership stated that its technology complies with EU cybersecurity and regulatory requirements, rejecting suggestions that its turbines could pose risks to electricity grids or be remotely disrupted.

The development comes amid broader European scrutiny of Chinese renewable energy technology. The European Commission has been reviewing the impact of Chinese manufacturers on European competitiveness and has also proposed restricting EU funding for projects using grid-related equipment supplied by what it considers “high-risk” providers.

The Eurasia Dispatch Take: The case illustrates the increasingly difficult balance Europe is attempting to strike between advancing the energy transition, maintaining openness to foreign investment, and addressing industrial and security concerns tied to strategic infrastructure. Chinese companies could face challenges securing approval for large-scale projects in Europe, particularly as debates over the cybersecurity risks associated with Chinese renewable energy technology continue to intensify.

Spain may nevertheless represent a relatively favourable option, given that political and economic ties between Madrid and Beijing currently appear less confrontational than in some other parts of Europe. However, for businesses operating across the sector, longer-term certainty will likely depend less on individual national relationships and more on the broader trajectory of EU-China economic ties. Until there is greater stability in the overall relationship, projects involving Chinese strategic technology are likely to remain subject to regulatory scrutiny and potential political challenges across the EU.

COMMENTARY

ECB study and Chinese media commentary highlight diverging views on Europe’s industrial challenges

A recent European Central Bank (ECB) analysis examining the impact of China’s industrial rise on the euro area has revealed contrasting interpretations in Europe and China about the two sides’ economic relationship.

The ECB report assessed how growing Chinese competitiveness affects European production, trade, and inflation. It argued that cheaper Chinese imports, particularly intermediate goods used in manufacturing, can reduce production costs and support EU GDP growth, while increased competition in sectors such as automotive and electronics places pressure on some European producers. The report also noted longer-term concerns linked to industrial displacement and strategic dependencies.

Chinese outlet Global Times criticised the analysis, portraying it as part of a broader European tendency to attribute internal economic difficulties to China rather than addressing structural issues within the EU economy, including regulation, energy costs, and productivity challenges.

The Eurasia Dispatch Take: The ECB paper highlighted both the benefits and the competitive pressures associated with China’s industrial growth. The analysis also differentiated between sectors, noting that some industries benefit from lower-cost Chinese intermediate goods while others face stronger competitive pressures from imports.

Against this backdrop, the narratives are best understood within the broader context of strained EU-China relations and ongoing trade defence measures. The contrasting interpretations illustrate how economic analyses are becoming controversial as both sides reassess trade, industrial policy, and strategic dependencies. More broadly, the exchange suggests that stabilising EU-China relations will likely require further dialogue, particularly on questions related to market access, industrial competitiveness, and economic security.

BEFORE YOU GO

Trade defence measures, adjusting supply chains, and industrial competitiveness have shaped the Eurasian discourse over the past weeks. Developments on these fronts will reverberate across global politics, trade, and defence. If you are interested in how these processes evolve, stay tuned for further updates in the next issue of Eurasia Dispatch! Thank you for reading, and we’d love to hear your thoughts—feel free to share your insights and feedback.

Until next time,

Eurasia Dispatch

Disclaimer: I manage this Substack account independently, in my personal capacity. The views expressed are my own and do not represent the views of my affiliated institutions.

Welcome to the latest issue of the newsletter! As always, there is a lot to unpack, so let’s get down to business.

This week, Eurasia Dispatch covers:

• Institutions

  • EU, China, and Brazil launch coalition on carbon market cooperation

• Member states

  • Belgian foreign minister calls for EU protection of strategic industries

• Business

  • EU imposes anti-dumping duties on Chinese adipic acid

• Commentary

  • EU concerns over Chinese solar technology and grid security

INSTITUTIONS

EU, China, and Brazil launch coalition on carbon market cooperation

The European Union, China, and Brazil have launched the Open Coalition on Compliance Carbon Markets, a new initiative aimed at strengthening international cooperation on carbon pricing and emissions trading systems. The coalition was formally established in Florence on 7 May and builds on commitments discussed at COP30 in Brazil in 2025.

The initiative seeks to improve the transparency, integrity, and effectiveness of domestic carbon markets by encouraging cooperation on monitoring systems, carbon accounting standards, and verification mechanisms. It will also examine the role of high-integrity carbon offsets and explore ways to improve compatibility between different carbon pricing systems.

The coalition is open to countries operating national carbon pricing schemes, including emissions trading systems and carbon taxes. Germany and New Zealand are among the first additional members to join, while Brazil will chair the group during its first two years, alongside China and the European Commission as co-chairs.

The Eurasia Dispatch Take: The development highlights continued areas of cooperation between the EU and China in climate governance, despite broader tensions over trade, industrial policy, and market access. It also reflects ongoing efforts to coordinate international approaches to emissions reduction and the low-carbon transition through multilateral mechanisms.

At the same time, the launch of the coalition is unlikely on its own to significantly alter the broader trajectory of EU-China relations, which remain shaped by disputes over industrial competitiveness, technology, subsidies, and economic security. More substantive progress in bilateral ties would likely require movement on several longstanding issues, including the electric vehicle dispute, the Nexperia case, and the question of long-term rare earth export licensing.

Even so, the initiative demonstrates that climate policy remains one of the few areas where Brussels and Beijing continue to identify overlapping interests and maintain structured engagement despite wider geopolitical and economic frictions.

MEMBER STATES

Belgian foreign minister calls for EU protection of strategic industries

Belgian Foreign Minister Maxime Prévot has urged the European Union to strengthen protections for strategic industries facing pressure from Chinese imports, identifying sectors such as chemicals, pharmaceuticals, metals, automotive manufacturing, and critical minerals as priorities. Speaking after meetings with senior Chinese officials in Beijing, Prévot said the EU should focus on measures that can be implemented quickly and effectively to support industrial competitiveness.

He acknowledged that any new EU measures could trigger countermeasures from China, but argued that the bloc should still consider steps aimed at reinforcing its industrial base. At the same time, he emphasised the importance of maintaining dialogue with Beijing and pursuing what he described as a partnership-based approach.

Prévot’s remarks come amid wider EU discussions on industrial policy, market access, and economic security. Brussels is currently reviewing its broader China strategy, including proposals linked to public procurement, strategic industries, and critical infrastructure.

The Eurasia Dispatch Take: The debate reflects increasing EU focus on balancing economic openness with efforts to strengthen resilience and reduce vulnerabilities in strategic sectors. Following the Belgian foreign minister’s remarks, Beijing called on Germany and France to help keep European markets open and avoid what it described as protectionist measures.

At a time when institutional relations between Brussels and Beijing remain strained, China appears to be placing greater emphasis on engagement with individual member states in an effort to shape discussions within the EU. Such outreach may influence the pace or details of specific policy measures, particularly given differing economic interests across the bloc. However, broader EU efforts aimed at de-risking supply chains and strengthening industrial capacity are likely to remain a central feature of the relationship. The overall direction of policy in Brussels continues to reflect concerns related to economic security, competitiveness, and strategic autonomy.

BUSINESS

EU imposes anti-dumping duties on Chinese adipic acid

The European Union has implemented definitive anti-dumping duties of 29.1 per cent to 42.3 per cent on imports of adipic acid from China, following provisional measures introduced in November. The European Commission concluded that Chinese exports were being sold at prices below the normal value, resulting in injury to EU producers.

Adipic acid production within the EU is concentrated in Germany, France, and Italy, employing over 1,100 workers. The chemical is primarily used in the manufacture of Nylon 66 and polyester polyols, which serve a range of industries including textiles, automotive, furniture, footwear, and construction.

EU imports of adipic acid from outside the bloc total approximately €160 million annually, with Chinese shipments accounting for €130 million. The duties are intended to address the pricing discrepancy and mitigate the economic impact on domestic producers. These measures follow the EU’s standard anti-dumping procedures, which involve preliminary investigations, stakeholder consultations, and the imposition of provisional tariffs before definitive duties are confirmed.

The Eurasia Dispatch Take: The EU’s decision to impose anti-dumping duties on Chinese adipic acid forms part of its broader use of trade defence instruments to address what it sees as market distortions and safeguard domestic industries under international trade rules. These measures join a wider set of tariffs the EU has applied to products ranging from electric vehicles to ceramics and hardwood plywood.

Trade tensions are not one-sided: China maintains tariffs on EU exports, including brandy, dairy products, and pork. The evolving pattern of measures illustrates a broader restructuring of economic relations between the two blocs. This process is expected to continue, as the EU develops additional trade defence tools, including measures aimed at addressing industrial surplus capacity, which remain under review. Overall, these actions highlight a strategic approach by both sides to manage trade flows while protecting key sectors in an increasingly complex economic relationship.

COMMENTARY

EU concerns over Chinese solar technology and grid security

Europe’s reliance on foreign-made solar inverters has drawn scrutiny due to potential vulnerabilities in critical energy infrastructure. Solar inverters, which convert electricity from solar panels and are often connected online for maintenance, dominate the EU market, with Huawei and Sungrow supplying hardware for more than 220 gigawatts of installed capacity.

Concerns focus on cybersecurity risks. Analysts note that remote access features, intended for safety and grid management, could in theory be exploited, potentially disrupting electricity supply. While no incidents have been recorded, the reported presence of rogue communication devices in some Chinese inverters has heightened EU awareness of possible threats.

The issue illustrates broader questions about resilience in Europe’s energy transition. With Chinese technology supplying the majority of solar panels and battery components, the EU is assessing how to balance rapid decarbonisation with secure, controllable supply chains. European manufacturers are positioned to increase production if demand shifts, though at slightly higher costs.

The Eurasia Dispatch Take: The debate highlights the EU’s effort to align industrial strategy with cybersecurity in its green energy transition. The fact that no disruptions from Chinese solar inverters have been reported, yet restrictions were implemented, suggests a cautious stance in Brussels towards external suppliers. While the precise source of this caution is complex, it appears linked to recent geopolitical and energy challenges, including the security implications of the Ukraine conflict, disruptions in energy markets due to tensions in Iran, and unpredictability in transatlantic relations with the United States. These factors have collectively heightened concerns over supply chain resilience and infrastructure security. In this context, Europe is likely to continue pursuing a de-risking strategy to secure its energy transition by limiting exposure to external vulnerabilities while strengthening domestic industrial capabilities.

BEFORE YOU GO

Cybersecurity, anti-dumping tariffs, and strategic industries have shaped the Eurasian discourse over the past weeks. Developments on these fronts will reverberate across global politics, trade, and defence. If you are interested in how these processes evolve, stay tuned for further updates in the next issue of Eurasia Dispatch! Thank you for reading, and we’d love to hear your thoughts—feel free to share your insights and feedback.

Until next time,

Eurasia Dispatch

Disclaimer: I manage this Substack account independently, in my personal capacity. The views expressed are my own and do not represent the views of my affiliated institutions.

Welcome to the latest issue of the newsletter! As always, there is a lot to unpack, so let’s get down to business.

This week, Eurasia Dispatch covers:

• Institutions

  • EU–China tensions rise over telecom security rules and market access measures

• Member states

  • Ireland launches investigation into Shein over EU data transfers to China

• Business

  • EU limits financing for renewable projects using certain foreign grid equipment

• Commentary

  • Report highlights Europe’s reliance on Chinese green technology

INSTITUTIONS

EU–China tensions rise over telecom security rules and market access measures

Tensions between the European Union and China have intensified following EU proposals that could restrict the use of equipment from Chinese telecom firms such as Huawei and ZTE. The measures, linked to revisions of the Cybersecurity Act, aim to strengthen network security and may require member states to phase out suppliers designated as high risk.

China has criticised the proposals, calling for the removal of language that classifies its companies as security concerns. Beijing has warned that it could introduce countermeasures affecting EU businesses if the legislation proceeds, and has raised concerns about potential impacts on trade, investment, and global supply chains.

The dispute forms part of a broader pattern of friction between Brussels and Beijing, alongside disagreements over industrial policy, market access, and trade imbalances. EU officials have defended the measures as necessary to protect critical infrastructure and ensure a level playing field, while emphasising that policies are consistent with international obligations.

The Eurasia Dispatch Take: The proposals remain under discussion and require further approval. In parallel, there are indications that China has already increased scrutiny of EU telecom companies operating in its market, including through national security reviews. Any potential countermeasures could range from formalising such practices to more restrictive actions, depending on how EU regulations evolve.

The scale and nature of any response by China will likely be influenced by both the final design of EU measures and the broader state of bilateral relations. The EU has signalled its intention to strengthen its industrial and technological base, suggesting that adjustment will be required for foreign firms seeking continued market access. At the same time, managing these changes without significantly disrupting economic ties remains an important consideration for both parties.

MEMBER STATES

Ireland launches investigation into Shein over EU data transfers to China

Ireland’s Data Protection Commission (DPC) has opened an inquiry into Shein Ireland, examining potential breaches of the EU’s General Data Protection Regulation (GDPR) in relation to transfers of Europeans’ personal data to China. The investigation will also assess Shein’s overall compliance with GDPR rules on transparency and data processing.

Under EU law, personal data can only be transferred outside the bloc if adequate protections are in place. Since the EU and China lack a formal data adequacy agreement, additional safeguards are required to permit legal transfers.

The probe follows a January 2025 complaint filed by European privacy group Noyb with Italian authorities. It forms part of a broader regulatory focus on data flows to China, as illustrated by recent DPC actions against TikTok, which was found to have allowed Chinese employees to access EU user data. TikTok’s appeal is still pending in Ireland’s courts.

Shein has stated it is cooperating with the DPC and will present ongoing initiatives to address data handling.

The Eurasia Dispatch Take: Ireland’s DPC previously also led investigations and enforcement actions against TikTok over its handling of European user data. Chinese companies operating in Europe face a range of regulatory challenges, with Shein having been fined in France and Italy. The scrutiny reflects broader shifts in EU–China economic relations, in which adherence to EU standards on data protection and transparency is increasingly emphasised. Compliance with these regulations is a key component for maintaining stable and constructive commercial ties between the EU and Chinese firms.

BUSINESS

The EU limits financing for renewable projects using certain foreign grid equipment

The European Commission has instructed key European lending institutions to stop financing renewable energy projects that use grid equipment sourced from China, Iran, or Russia, effective 1 November. The measure primarily affects devices such as inverters, which regulate the flow of electricity from renewable sources into the grid and are considered critical to system stability.

The guidance applies to major financial institutions, including the European Investment Bank (EIB), the European Bank for Reconstruction and Development (EBRD), and national development banks such as Germany’s KfW. It covers projects connected to the EU electricity grid, including those located in neighbouring regions such as the Balkans and Morocco.

Inverters are widely used across solar, wind, and battery systems, and imports from China have increased significantly in recent years, reflecting the country’s strong position in this segment of the market. The Commission’s approach focuses on reducing potential vulnerabilities in energy infrastructure linked to external suppliers.

The Eurasia Dispatch Take: According to internal discussions, the scope of the restriction could be extended to additional renewable energy components, depending on future policy decisions. Chinese suppliers, including major inverter manufacturers such as Huawei, may be affected given their strong presence in the EU market. The shift may also influence project costs, as Chinese equipment has often been priced competitively compared to alternatives.

The measure reflects a broader adjustment in EU policy aimed at reducing reliance on external suppliers in strategic sectors. At the same time, both the EU and China continue to signal interest in maintaining stable economic ties. As a result, policy developments are likely to reflect a balance between strengthening domestic resilience and preserving functional trade and investment relationships between the two sides.

COMMENTARY

Report highlights Europe’s reliance on Chinese green technology

Europe’s reliance on Chinese green technology has raised economic and security concerns, according to a report by policy experts including former UK national security official Michael Collins. The study finds that China accounts for a significant share of Europe’s imports across key sectors, supplying the majority of solar panels, lithium-ion batteries, and related components used in renewable energy systems and electric vehicles.

The report identifies several potential risks linked to this dependence. These include supply chain disruptions, whether due to geopolitical tensions or external shocks, as well as the possibility of increased economic vulnerability over time. It also raises concerns about data security and the broader implications of integrating foreign-produced technologies into critical infrastructure.

While the likelihood of direct disruption through technological means is assessed as low under normal conditions, the report notes that dependencies could become more relevant in periods of heightened geopolitical tension. It also highlights possible spillover effects across industries, including automotive, energy, and defence.

The Eurasia Dispatch Take: The findings add to ongoing debates in Europe on balancing energy transition objectives with supply chain resilience and industrial competitiveness. They echo conclusions from a report by the German Institute for Defence and Strategic Studies, which suggested that external suppliers could, in theory, influence infrastructure operations or access sensitive data if deeply embedded in energy systems. These claims have been rejected by the China Chamber of Commerce to the EU, which disputes allegations of security risks linked to Chinese technology.

Such assessments point to a broader shift in EU thinking on economic security and technological dependence. Policymakers are increasingly examining how to reduce reliance on external suppliers in strategic sectors, including green technologies. However, the scope and implementation of any policy adjustments remain uncertain, particularly as key legislative proposals such as the Industrial Accelerator Act are still under discussion and subject to approval.

BEFORE YOU GO

Data security, economic statecraft and green tech dependencies have shaped the Eurasian discourse over the past weeks. Developments on these fronts will reverberate across global politics, trade, and defence. If you are interested in how these processes evolve, stay tuned for further updates in the next issue of Eurasia Dispatch! Thank you for reading, and we’d love to hear your thoughts—feel free to share your insights and feedback.

Until next time,

Eurasia Dispatch

Disclaimer: I manage this Substack account independently, in my personal capacity. The views expressed are my own and do not represent the views of my affiliated institutions.

Welcome to the latest issue of the newsletter! As always, there is a lot to unpack, so let’s get down to business.

This week, Eurasia Dispatch covers:

• Institutions

  • EU defends Industrial Acceleration Act as China warns of countermeasures

• Member states

  • Dutch intelligence warns of expanding Chinese cyber-espionage targeting Europe

• Business

  • EU adopts new Russia sanctions package, including measures on third-country entities

• Commentary

  • Turkmenistan strengthens strategic role in China’s growing Eurasian connectivity network

INSTITUTIONS

EU defends Industrial Acceleration Act as China warns of countermeasures

The European Commission has defended its proposed Industrial Accelerator Act (IAA) following criticism from China, stating that the measures are consistent with World Trade Organization rules and based on the principle of reciprocity. The legislation, presented in March, seeks to limit access by non-EU companies to subsidies and public procurement in strategic sectors, including green technologies and advanced manufacturing.

Brussels argues that the initiative responds to longstanding concerns over unequal market access, noting that European firms continue to face restrictions in China. EU officials maintain that the framework is designed to support the domestic industry while remaining aligned with international obligations.

Beijing has criticised the proposal as discriminatory and warned of potential countermeasures if it proceeds. Chinese authorities have also lodged formal concerns with the European Commission, adding to existing tensions between the two sides.

The Eurasia Dispatch Take: The dispute reflects a broader and continuing divergence between the EU and China on market access and industrial policy. It follows earlier tensions, including disagreements over EU sanctions targeting Chinese entities, and illustrates the difficulties in stabilising bilateral economic relations.

The Industrial Accelerator Act has already been scaled back, with sectors such as artificial intelligence, semiconductors, and quantum computing removed from its scope. It now focuses on batteries, electric vehicles, solar photovoltaic technologies, and critical raw materials, linking access to public funding to local production requirements. The proposal still requires approval from EU member states and the European Parliament, leaving scope for further revisions.

The direction of travel, however, is clear: the EU is seeking to strengthen domestic industrial capacity in strategic sectors. For China, maintaining access to the European market may increasingly require adapting to these evolving conditions, including deeper local engagement. How both sides manage this adjustment will be key to avoiding further escalation and sustaining a workable economic relationship.

MEMBER STATES

Dutch intelligence warns of expanding Chinese cyber-espionage targeting Europe

China’s cyber-espionage capabilities are approaching those of the United States and are increasingly focused on Western defence industries, according to the Dutch Military Intelligence and Security Service (MIVD). In its latest annual report, the agency highlights efforts by Chinese actors to access sensitive technologies, gather intelligence, and identify vulnerabilities within military and industrial systems.

The report places China alongside Russia as a growing security concern for Europe, noting that cooperation between the two countries is adding to existing risks. While Russia remains the most direct threat to European security, particularly in the context of the war in Ukraine, China’s activities are viewed as contributing to a more complex threat environment. China’s embassy in the Netherlands criticised the report.

European intelligence assessments indicate that cyber operations target both military and civilian sectors. At the same time, responses within Europe remain primarily focused on Russia, with China often regarded as a more indirect challenge.

The Eurasia Dispatch Take: The findings follow similar assessments from other European countries, including Finland and the United Kingdom, which have recently raised concerns about China’s cyber activities. Together, these reports highlight growing awareness of Europe’s exposure to cyber risks in an evolving geopolitical environment.

More broadly, such security concerns add complexity to ongoing efforts by the EU and China to recalibrate their economic relationship. Discussions on trade and investment are already shaped by issues such as concerns about dumping practices, state subsidies, and market access conditions. The addition of cybersecurity concerns further complicates this landscape, as policymakers seek to balance economic engagement with security considerations.

BUSINESS

EU adopts new Russia sanctions package, including measures on third-country entities

The European Union approved a €90 billion loan package for Ukraine on 23 April alongside its 20th round of sanctions against Russia. The latest measures target Russia’s military-industrial complex by listing 58 companies and individuals linked to the production of military equipment, including drones.

The package also focuses on limiting Russia’s access to critical technologies sourced through third countries. In this context, the EU designated 16 entities based in countries including China, the United Arab Emirates, Uzbekistan, Kazakhstan, and Belarus, citing their alleged role in supplying dual-use goods or military-related components.

Among those listed are several Chinese firms, prompting a response from China’s Ministry of Commerce, which expressed opposition to the measures and called for their removal. Beijing stated that the decision could affect broader EU–China relations and indicated that it may take steps to protect the interests of its companies.

The Eurasia Dispatch Take: The development reflects the widening scope of EU sanctions, with increasing focus on indirect supply channels linked to Russia’s defence sector. Recent political changes in Hungary may also influence the approval process for future measures, as Budapest had previously been seen as a source of delays in adopting sanctions packages.

At the same time, the inclusion of Chinese entities has drawn opposition from Beijing, adding strain to EU–China relations. China has criticised such measures and signalled potential responses to protect its companies’ interests.

For businesses operating across jurisdictions, these developments underline the importance of monitoring sanctions regimes closely. Companies involved in international supply chains may face heightened risks of indirect exposure, particularly where transactions involve third-country intermediaries or dual-use goods subject to regulatory scrutiny.

COMMENTARY

Turkmenistan strengthens strategic role in China’s growing Eurasian connectivity network

A series of recent developments has highlighted Turkmenistan’s growing importance in China’s broader Eurasian strategy, according to a commentary written by Hao Nan, a research fellow with the Charhar Institute. High-level political exchanges, including meetings between Chinese and Turkmen leaders, alongside agreements to advance Phase IV of the Galkynysh gas field, point to deepening bilateral cooperation in energy and infrastructure.

These steps reflect a wider Chinese approach focused on diversifying supply routes, partners, and transport corridors. Rather than relying on a single pathway to European and global markets, Beijing is growing a network of overland connections to enhance flexibility and reduce exposure to geopolitical disruptions, including maritime chokepoints and regional instability.

Turkmenistan occupies a strategic position within this framework. It contributes to China’s overland energy supply, offers transit links towards Iran and the Gulf, and forms part of multiple transport corridors connecting Asia and Europe. This overlapping connectivity increases its relevance within evolving trade and energy networks.

While logistical and infrastructure challenges remain, Turkmenistan’s role illustrates a broader shift towards more diversified and interconnected Eurasian supply chains, as countries adapt to changing geopolitical and economic conditions.

The Eurasia Dispatch Take: Central Asia holds strategic importance for major powers due to its market potential, natural resources, and geographic position linking key regions. The European Union and the United States have increased engagement with the region recently, reflecting its growing relevance. However, Russia and China continue to maintain a more established presence through economic, political, and security ties.

For the EU, sustained involvement is important to remain a relevant actor in the region’s evolving landscape. At the same time, Central Asian states have shown interest in diversifying their external partnerships, seeking to engage with multiple partners rather than relying on a single counterpart. This creates scope for broader cooperation across economic, infrastructure, and energy sectors. The region’s approach suggests an openness to balanced engagement, allowing different external actors to participate in its development while supporting its own strategic autonomy.

BEFORE YOU GO

Industrial policy, cybersecurity, and Eurasian connectivity have shaped the Eurasian discourse over the past weeks. Developments on these fronts will reverberate across global politics, trade, and defence. If you are interested in how these processes evolve, stay tuned for further updates in the next issue of Eurasia Dispatch! Thank you for reading, and we’d love to hear your thoughts—feel free to share your insights and feedback.

Until next time,

Eurasia Dispatch

P.S. As always, I am grateful to my editor.

Welcome to the latest issue of the newsletter! As always, there is a lot to unpack, so let’s get down to business.

This week, Eurasia Dispatch covers:

• Institutions

  • EU champions in the making?

• Member states

  • Spain calls for deeper EU–China engagement while highlighting trade imbalances

• Business

  • EU targets glass fibre imports linked to Chinese overseas production

• Commentary

  • EU industrial policy and China: The scope for deeper cooperation

INSTITUTIONS

EU champions in the making?

The European Union is preparing a potential overhaul of its merger control framework, as policymakers reassess how competition rules can support industrial competitiveness. Draft proposals suggest the European Commission may place greater weight on factors such as innovation, investment capacity, and supply chain resilience when reviewing corporate mergers.

This would mark a shift from the long-standing emphasis on consumer prices and market competition that has guided EU antitrust policy since the early 2000s. The revised approach, still under discussion, could broaden the conditions under which mergers are approved.

The initiative reflects wider concerns about Europe’s position in key sectors, particularly in relation to the United States and China. Larger firms are seen by some policymakers as better placed to invest in advanced technologies and strengthen supply chains.

The Eurasia Dispatch Take: Competition safeguards are likely to remain, but the proposed reforms suggest a shift in emphasis towards industrial scale and long-term competitiveness in a more technology-driven global economy. This points to a broader recalibration of EU policy priorities. A central challenge will be to develop a distinct European approach, rather than replicating models seen in the United States or China. The EU’s current framework has delivered clear benefits for consumers, particularly through strong competition enforcement, but concerns persist that it may constrain the growth and global positioning of European firms. Policymakers will therefore need to balance these considerations carefully, seeking ways to strengthen corporate competitiveness and support the emergence of larger firms, while preserving the consumer protections that underpin the single market.

MEMBER STATES

Spain calls for deeper EU–China engagement while highlighting trade imbalances

Spanish Prime Minister Pedro Sánchez has advocated closer engagement with China, stating that stronger ties with Beijing align with the interests of both Spain and the European Union. Speaking during his official visit last week, he emphasised the importance of dialogue, cooperation, and open economic relations.

Sanchez framed the visit within a broader context of global uncertainty, citing pressures on the international order and the need for a more inclusive and stable system. He reiterated support for multilateralism and encouraged China to contribute to global challenges such as climate action and conflict resolution. The two sides signed roughly 20 agreements, half of them economic in nature, focusing on boosting Spanish exports like agrifood and deepening partnerships in sustainability, AI, and the digital sector.

At the same time, he drew attention to the growing trade imbalance between the EU and China, describing it as unsustainable. Spain recorded a significant bilateral trade deficit with China in 2025, reflecting broader EU concerns about market access and competitive conditions.

The Eurasia Dispatch Take: The visit has been assessed from multiple perspectives. Observers have noted that this was Sanchez’s fourth trip to China in as many years, underlining sustained engagement. Some analysts suggest that, following political changes in Hungary, Spain may now be among the most China-engaged EU member states. At the same time, reports indicate that Beijing has sought Spanish support in shaping EU discussions on policies aimed at strengthening the bloc’s industrial competitiveness.

Within the EU, positions on China vary across member states, reflecting differing economic interests and policy priorities. This creates a spectrum of approaches, ranging from closer engagement to more cautious or restrictive stances. The key challenge for the EU is to maintain a coherent and unified policy framework, while allowing for internal differences. At the same time, preserving a functional relationship with China in areas of shared interest remains an important consideration.

BUSINESS

EU targets glass fibre imports linked to Chinese overseas production

The European Commission has imposed anti-dumping duties on glass fibre imports produced by Chinese-owned firms operating in Egypt, Bahrain, and Thailand, citing efforts to circumvent existing EU trade measures. The tariffs, ranging from 11 per cent to 25.4 per cent, apply to a material widely used in the renewable energy sector and follow an investigation into pricing practices and state support.

The decision reflects broader EU concerns over imports routed through third countries, particularly in connection with China’s Belt and Road-linked industrial investments. Brussels has previously taken similar action against products such as aluminium foil produced outside China but linked to Chinese firms.

Glass fibre imports from the three countries accounted for around 24 per cent of the EU market in 2024, with Egypt representing the largest share. Industry representatives and trade unions have argued that production relocation has enabled continued access to the EU market despite earlier duties on China-based exports.

While stakeholders have welcomed the findings of unfair practices, some maintain that the current measures may not fully address the scale of import competition or its potential impact on employment and domestic production capacity.

The Eurasia Dispatch Take: The development reflects a broader adjustment in EU–China economic relations, as China and its companies continue to expand internationally. At the same time, the EU focuses on strengthening its industrial competitiveness. Recent EU actions have included tariffs on electric vehicles manufactured in China, as well as duties on products such as hardwood plywood. Until now, these measures have largely targeted imports that originate directly from China. However, there are signs that the scope is widening to include goods produced in third countries where Chinese firms maintain a strong presence, particularly where those countries have close trade links with the EU. This approach reflects the global operations of Chinese companies and their continued reliance on access to the European market. Similar measures could emerge across other sectors as supply chains become more geographically dispersed.

COMMENTARY

EU industrial policy and China: The scope for deeper cooperation

The EU’s proposed Industrial Accelerator Act marks a shift in its industrial strategy, introducing measures such as investment screening, local content requirements, and conditions tied to public funding in sectors including electric vehicles, batteries, and renewable technologies. These provisions have drawn criticism from China, which views them as restrictive to foreign investment.

However, as Patrick Schroeder of Chatham House argues, the framework also reflects a degree of convergence between European and Chinese industrial approaches. Elements such as joint ventures, local workforce requirements, and domestic value creation have long been features of China’s own policies.

Rather than signalling a complete move towards protectionism, the changes may encourage more embedded forms of cooperation. Chinese firms with global operations are already investing in European production, particularly in the battery sector, often through partnerships with local companies. Such arrangements can support technology exchange, job creation, and supply chain integration within the EU.

Schroeder suggests that, if managed carefully, the evolving policy landscape could lead to more structured and reciprocal EU–China industrial engagement, particularly in areas linked to decarbonisation and advanced manufacturing.

The Eurasia Dispatch Take: Amid ongoing economic disruption linked to US tariffs and regional conflicts, the EU and China face incentives to sustain a functional economic relationship. Both sides are pursuing established priorities: China continues to advance its industrial policy, while the EU remains focused on strengthening its industrial competitiveness. These approaches are unlikely to shift significantly in the near term. The key issue is whether areas of shared interest can be identified and developed further. Both economies depend on large, stable markets to support their industries and long-term growth strategies. As a result, there is a mutual interest in maintaining market access and avoiding excessive fragmentation of trade and investment flows. Continued engagement in sectors such as advanced manufacturing and clean technologies may offer opportunities for cooperation within this evolving framework.

BEFORE YOU GO

Spain-China ties and the EU’s industrial policy have shaped the Eurasian discourse over the past weeks. Developments on these fronts will reverberate across global politics, trade, and defence. If you are interested in how these processes evolve, stay tuned for further updates in the next issue of Eurasia Dispatch! Thank you for reading, and we’d love to hear your thoughts—feel free to share your insights and feedback.

Until next time,

Eurasia Dispatch

Disclaimer: I manage this Substack account independently, in my personal capacity. The views expressed are my own and do not represent the views of my affiliated institutions.

Welcome to the latest issue of the newsletter! As always, there is a lot to unpack, so let’s get down to business.

This week, Eurasia Dispatch covers:

• Institutions

  • EU and U.S. move closer towards a joint critical minerals framework

• Member states

  • Hungary vote signals potential reset in EU relations

• Business

  • EU–China goods trade deficit widens in 2025

• Commentary

  • EU gains trust in Southeast Asia, but strategic engagement lags

INSTITUTIONS

EU and U.S. move closer towards a joint critical minerals framework

The European Union and the United States are reportedly close to finalising an agreement to strengthen cooperation on critical minerals supply chains, as both seek to reduce reliance on China.

According to draft proposals, the arrangement would focus on coordinating investment, standards, and joint projects across the full value chain, from extraction to recycling. It may also include mechanisms such as minimum price incentives to support non-Chinese suppliers and measures to manage potential supply disruptions. The initiative could be expanded to include additional partners, including Japan and Mexico.

The move follows export controls introduced by China in 2025, particularly on rare earth materials, which exposed vulnerabilities in global supply chains. China currently accounts for a dominant share of global rare earth processing capacity.

While details remain under negotiation, the proposed framework signals a shared interest between Brussels and Washington in diversifying supply sources and strengthening resilience in strategic sectors. The agreement, still subject to approval by EU member states, could form part of a broader effort to coordinate industrial policy among like-minded economies.

The Eurasia Dispatch Take: The initiative carries potential risks for the European Union. One concern is the reliability of the United States as a long-term partner, given recent policy shifts under Donald Trump, which have introduced uncertainty into transatlantic relations. This raises the possibility of diverging priorities affecting future cooperation.

Another challenge lies in Europe’s continued dependence on China for critical minerals. Closer alignment with Washington on supply chain diversification could complicate efforts to maintain a stable and functional economic relationship with Beijing in this sector.

At the same time, the EU faces limited alternatives in addressing supply vulnerabilities and is likely to continue pursuing diversification and resilience. The long-term trajectory of transatlantic cooperation may also depend on future political developments in the United States, which could influence the stability and direction of such initiatives.

MEMBER STATES

Hungary vote signals potential reset in EU relations

Hungary’s parliamentary election has brought an end to Viktor Orban’s 16-year tenure, with opposition leader Peter Magyar and his Tisza party securing a two-thirds majority. The result is being closely watched in European Union capitals, where Hungary’s stance had often complicated collective decision-making.

Under Orban, relations with Brussels were marked by disputes over the standards of the rule of law, leading to the suspension of EU funds and recurring tensions on issues such as support for Ukraine and sanctions on Russia. Hungary also maintained closer ties with certain external partners, including Russia and China, setting it apart from broader EU positions.

Magyar’s victory could signal a shift towards closer alignment with EU institutions and policies, although the pace and scope of any policy changes remain uncertain. Domestic economic concerns, including inflation and stagnant growth, were key factors in the election outcome. For the EU, the result may open the door to smoother coordination on internal governance and external policy priorities.

The Eurasia Dispatch Take: Although primarily a domestic development, the election outcome in Hungary may have implications for the European Union’s external relations. Under Viktor Orban, Hungary maintained close ties with China, but these did not translate into broader EU–China cooperation, given Budapest’s often strained relationship with Brussels.

If the incoming government led by Peter Magyar succeeds in improving relations with EU institutions while maintaining constructive engagement with China, Hungary could assume a more meaningful intermediary role. This would depend on its ability to balance national economic interests with EU policy frameworks and contribute to more coordinated approaches towards Beijing.

Any such shift remains contingent on the new government’s policy direction, but it could influence how individual member states shape the EU’s broader external engagement with China in the coming years.

BUSINESS

EU–China goods trade deficit widens in 2025

Trade in goods between the European Union and China remained skewed in 2025, with EU imports significantly exceeding exports. The EU exported goods worth €199.6 billion to China, while imports reached €559.4 billion, resulting in a trade deficit of €359.8 billion. Compared with 2024, exports declined by 6.5 per cent, and imports increased by 6.4%.

Over a longer period, the imbalance has widened. Since 2015, EU exports to China have grown by 37.1 per cent, while imports have risen by 89 per cent, indicating a faster growth of Chinese exports to the European market.

Machinery and industrial goods continue to dominate bilateral trade. The EU’s main exports to China include machinery, electrical equipment, and vehicles, alongside medical instruments and pharmaceuticals. On the import side, electrical machinery and equipment account for the largest share, followed by mechanical machinery, chemicals, and vehicles.

The Eurasia Dispatch Take: These trends underscore the importance of integrated industrial supply chains in trade between the European Union and China, as well as the persistent and structural nature of the EU’s trade deficit. The data is likely to reinforce calls from European leaders for greater access to the Chinese market and increased Chinese imports of EU goods, including recent remarks by Spanish Prime Minister Pedro Sanchez and French President Emmanuel Macron during their respective visits to China.

While Chinese officials have signalled an interest in expanding imports from Europe, the extent to which this will translate into a more balanced trade relationship remains uncertain. Future developments will depend on both market conditions and policy adjustments on either side.

COMMENTARY

EU gains trust in Southeast Asia, but strategic engagement lags

Confidence in the European Union across Southeast Asia has risen, according to the latest survey by the ISEAS-Yusof Ishak Institute. For the sixth consecutive year, the EU was identified as ASEAN’s preferred third-party partner to hedge against rivalry between the United States and China, with 37.7 per cent of respondents selecting the bloc. Trust in the EU’s role in supporting global stability also increased, while levels of distrust declined.

The EU remains a significant economic actor in the region, ranking as ASEAN’s third-largest trading partner and second-largest source of foreign direct investment. Ongoing and planned trade agreements with countries such as Singapore, Vietnam, and Indonesia further underscore its economic presence.

Analysts note that the EU is increasingly viewed as a predictable partner, particularly amid uncertainty surrounding U.S. foreign policy and concerns about China’s regional influence. However, questions remain about the EU’s ability to translate this perception into tangible strategic influence. Limited high-level political engagement and inconsistent participation in regional forums continue to constrain its impact, highlighting a gap between the EU’s reputation and its operational presence in Southeast Asia.

The Eurasia Dispatch Take: In parallel, a recent POLITICO European Pulse survey suggests a shift in public perceptions of the United States within Europe. Conducted across six EU countries—Poland, Spain, Belgium, France, Germany, and Italy—the poll found that only 12% of respondents view the US as a close ally, while 36% consider it a threat. By comparison, 29% identified China as a threat.

The findings follow a period of policy uncertainty since Donald Trump returned to office in January 2025, including debates over NATO commitments, tariff measures, and tensions surrounding the conflict in Iran.

Taken together with the State of Southeast Asia survey, the results point to a decline in public trust towards Washington. At the same time, they suggest a broader trend in which other regions may be strengthening cooperation and economic ties amid continued uncertainty in US foreign and trade policy.

BEFORE YOU GO

Trade data, Hungary’s elections, and critical minerals have shaped the Eurasian discourse over the past weeks. Developments on these fronts will reverberate across global politics, trade, and defence. If you are interested in how these processes evolve, stay tuned for further updates in the next issue of Eurasia Dispatch! Thank you for reading, and we’d love to hear your thoughts—feel free to share your insights and feedback.

Until next time,

Eurasia Dispatch

Disclaimer: I manage this Substack account independently, in my personal capacity. The views expressed are my own and do not represent the views of my affiliated institutions.

Welcome to the latest issue of the newsletter! As always, there is a lot to unpack, so let’s get down to business.

This week, Eurasia Dispatch covers:

• Institutions

  • EU lawmakers engage China on e-commerce standards and market access

• Member states

  • France strengthens energy and defence partnerships in Japan and South Korea

• Business

  • Chinese firms target EU market expansion amid policy uncertainty

• Commentary

  • EU–China ‘SMILE’ mission highlights scientific cooperation amid strategic frictions

INSTITUTIONS

EU lawmakers engage China on e-commerce standards and market access

A delegation from the European Parliament visited China for the first time in eight years, focusing on e-commerce regulation, consumer protection, and market access. Led by Anna Cavazzini, the group held discussions with Chinese regulators, lawmakers, and major platforms, including Alibaba, Shein, and Temu.

Talks addressed the rapid increase in low-value parcels entering the European Union, the majority of which originate from China, as well as differences in regulatory frameworks. EU representatives emphasised the application of EU consumer safety and digital standards to all firms operating in the Single Market, alongside concerns related to product compliance and competitive conditions.

The visit coincided with ongoing EU reforms of customs rules and enforcement mechanisms targeting cross-border e-commerce. It was followed by further policy developments in China aimed at balancing sector growth with regulatory oversight and expanding international engagement.

The Eurasia Dispatch Take: The exchanges point to a renewed effort to manage trade frictions through dialogue while sustaining institutional engagement on technical and regulatory matters. The visit itself marked a resumption of high-level parliamentary interaction after an eight-year gap, signalling a degree of stabilisation in bilateral contacts between the European Union and China.

At the same time, the discussions suggest that China is taking note of EU concerns regarding the volume and compliance of low-value e-commerce imports. Recent policy signals indicate an interest in adjusting aspects of cross-border trade to better align with external regulatory expectations. Such developments could influence how major platforms, including Alibaba, Shein, and Temu, operate within the European market.

MEMBER STATES

France strengthens energy and defence partnerships in Japan and South Korea

During recent visits to Japan and South Korea, Emmanuel Macron advanced cooperation on energy security, defence, and strategic industries amid wider geopolitical uncertainty.

In Tokyo, Macron and Prime Minister Sanae Takaichi agreed on initiatives to secure critical mineral supply chains and enhance defence collaboration. Both sides also emphasised the importance of maintaining stable energy flows, particularly through key maritime routes such as the Strait of Hormuz.

In Seoul, Macron held talks with President Lee Jae Myung, where the two countries committed to expanding defence ties, including joint exercises and cooperation in military production. Discussions also covered broader economic and technological collaboration in sectors such as nuclear energy, semiconductors, quantum technologies, and renewable energy.

The Eurasia Dispatch Take: The visits underscore France’s efforts to expand its engagement in the Asia-Pacific through partnerships centred on energy security, industrial collaboration, and defence cooperation. They also take place against a shifting international context shaped in part by evolving policies from the United States, which have prompted partners to reassess their external relationships.

For the European Union, this environment has reinforced existing policy directions, including strategic autonomy and efforts to reduce dependencies in key sectors. As a result, cooperation with regional partners such as Japan and South Korea is increasingly framed within a broader strategy of diversification and resilience.

BUSINESS

Chinese firms target EU market expansion amid policy uncertainty

A report presented at the 2026 New Quality Productive Forces and Cross-Border Finance Forum in Luxembourg highlights that Chinese companies plan to deepen their presence in the European Union despite regulatory and policy uncertainties. Based on surveys and interviews with around 100 Chinese firms operating in Europe, the report found that nearly 80 per cent intend to expand investment over the next three years, with about 15% expecting significant growth.

Investment spans 18 sectors, led by new energy vehicles, auto parts, IT and software services, and renewable energy. Firms are increasingly localising operations, shifting from export-focused strategies to “in Europe, for Europe” models. This reflects a maturing approach to the EU market, emphasising both industrial footprint and engagement with local institutions.

Policy uncertainty remains the main concern, with more than half citing it as their top challenge, ahead of geopolitical risk and market access issues. Key regulatory areas affecting operations include the General Data Protection Regulation, the Foreign Subsidies Regulation, and sector-specific rules for EVs and batteries.

Officials at the forum encouraged EU financial institutions to support long-term innovation and called for a transparent, predictable business environment to facilitate sustainable bilateral economic cooperation.

The Eurasia Dispatch Take: Notably, current tensions in EU–China economic relations have not diminished Chinese business interest in Europe, underlining the continent’s continued significance in China’s foreign and economic strategy. Both Brussels and Beijing face a context in which the United States is seen as an unpredictable partner, with unilateral measures and tariffs affecting global trade.

Policy uncertainty is likely to persist, as the EU has yet to define how it will recalibrate economic ties with China or pursue industrial competitiveness upgrades. In the near term, Europe is expected to focus on diversification, developing domestic capacity, and reducing strategic dependencies. Nonetheless, these challenges do not preclude a constructive economic relationship between the two sides; rather, they highlight the need to establish a new operational framework to guide engagement effectively.

COMMENTARY

EU–China ‘SMILE’ mission highlights scientific cooperation amid strategic frictions

The European Space Agency and the Chinese Academy of Sciences are preparing to launch a joint satellite mission, SMILE, aimed at studying how Earth’s magnetic field interacts with solar radiation. The spacecraft will be carried by a Vega-C rocket into a highly elliptical orbit, enabling detailed observation of the planet’s magnetosphere and solar-driven “space weather”.

The project seeks to improve understanding of geomagnetic storms, which can disrupt communications, power grids, and electronic systems. Its instruments will provide new data on how solar activity affects Earth’s protective magnetic field, with potential applications for forecasting space weather events.

Agreed in 2016, the mission reflects a period of closer international cooperation and has continued despite increasingly complex geopolitical conditions. While technical and regulatory challenges, including export controls, have delayed the programme, both sides have maintained coordination.

The Eurasia Dispatch Take: The SMILE mission demonstrates that targeted scientific cooperation between the European Union and China can continue despite broader strategic tensions. In a global environment marked by increasing fragmentation, such projects provide a platform for sustained technical collaboration.

This cooperation may serve two functions. First, it could establish a model for effective coordination in specialised areas, potentially contributing to greater mutual understanding over time. Second, it highlights the EU’s position within a wider landscape of space partnerships. While the United States and China have limited direct collaboration in this domain, the EU maintains engagement with both, including participation in initiatives such as the Artemis programme. This positioning allows Europe to remain involved across multiple frameworks of international cooperation.

BEFORE YOU GO

Space cooperation and France’s Asia outreach have shaped the Eurasian discourse over the past weeks. Developments on these fronts will reverberate across global politics, trade, and defence. If you are interested in how these processes evolve, stay tuned for further updates in the next issue of Eurasia Dispatch! Thank you for reading, and we’d love to hear your thoughts—feel free to share your insights and feedback.

Until next time,

Eurasia Dispatch

Disclaimer: I manage this Substack account independently, in my personal capacity. The views expressed are my own and do not represent the views of my affiliated institutions.

Welcome to the latest issue of the newsletter! As always, there is a lot to unpack, so let’s get down to business.

This week, Eurasia Dispatch covers:

• Institutions

  • European Parliament delegation visits China after 8-year hiatus

• Member states

  • Germany’s reference to a future China trade deal meets with EU pushback

• Business

  • China signals willingness to import more from EU, urges Brussels to ease export controls

• Commentary

  • EU–China ties: De-risking efforts amid persistent economic interdependence

INSTITUTIONS

European Parliament delegation visits China after 8-year hiatus

A delegation from the European Parliament, led by Anna Cavazzini, is visiting China for the first time in eight years, with discussions centred on the digital economy and e-commerce regulation. Meetings in Beijing and Shanghai include engagements with Chinese regulators, industry representatives, and European businesses, covering market access, consumer protection, and product safety standards. The delegation is also expected to exchange views with major platforms such as Alibaba, Shein, and Temu on compliance with EU rules.

Alongside the policy agenda, the visit reflects broader institutional attention to data and device security during official travel. Members of the delegation have received standard security briefings and guidance, including the use of temporary devices, in line with practices applied to missions involving sensitive digital environments.

The Eurasia Dispatch Take: The discussions take place against the backdrop of evolving EU measures on e-commerce imports. The European Union has reached an informal agreement to strengthen enforcement against online platforms that allow unsafe or non-compliant products into the Single Market, including goods sold via platforms such as Temu, Shein, and AliExpress.

Under the proposed reforms to the EU Customs Code, repeated non-compliance could result in penalties of up to 6 per cent of annual imports or, in some cases, suspension of platform activities. The measures aim to reinforce consumer protection and ensure a level playing field for businesses operating within the EU.

More broadly, the visit reflects ongoing engagement between the EU and China at a time of wider economic and political differences. Expanded channels for dialogue may support more structured exchanges on trade and regulatory issues.

MEMBER STATES

Germany’s reference to a future China trade deal meets with EU pushback

Germany has signalled openness to a future trade agreement with China, with Chancellor Friedrich Merz raising the possibility as part of a broader push to expand external economic partnerships. The remarks suggest a willingness in Berlin to explore longer-term engagement with Beijing, particularly in support of export-oriented industries.

The proposal was met with a more cautious response from the European Commission, which stressed that substantive progress on longstanding trade concerns would be required before any negotiations could begin. These include issues such as industrial overcapacity, subsidies, and market access barriers, which Brussels argues continue to shape an uneven economic relationship.

The Eurasia Dispatch Take: The exchange highlights differing priorities within the European Union, as member states weigh national economic interests against collective efforts to address structural trade imbalances with China. EU policymakers have consistently raised similar concerns in recent years, suggesting that progress to date is viewed as limited.

This assessment persists despite policy measures introduced by the Chinese government aimed at boosting domestic demand and moderating excess industrial capacity. The gap between these measures and EU expectations continues to shape the tone and direction of the bloc’s trade policy towards China.

BUSINESS

China signals willingness to import more from EU, urges Brussels to ease export controls

China has called for closer economic engagement with the European Union, signalling its willingness to increase imports from the bloc while urging Brussels to relax restrictions on high-tech exports. The message was delivered by Commerce Minister Wang Wentao during a meeting with Maros Sefcovic on the sidelines of a World Trade Organization ministerial conference.

Beijing also emphasised the importance of avoiding the politicisation of trade and called for a more objective assessment of China’s economic development. The discussions covered broader issues, including WTO reform, investment facilitation, and e-commerce, with both sides expressing support for the multilateral trading system and the principle of most-favoured-nation treatment.

At the same time, China raised concerns about recent EU regulatory measures affecting foreign firms, while the EU indicated its willingness to continue engagement and manage differences. Both parties agreed to establish a working group on trade and investment and to maintain dialogue on export controls, signalling continued institutional coordination despite ongoing tensions.

The Eurasia Dispatch Take: The agreement to establish a working group introduces a more structured channel for engagement between the European Union and China. In recent years, exchanges at the political level have often reiterated established positions, reflecting persistent differences in perspective.

By contrast, discussions at the technical level may allow for more detailed examination of specific issues, where nuance can be more effectively addressed. This format could help clarify areas of misunderstanding and facilitate more practical dialogue on trade and investment matters. Over time, such engagement may support more consistent communication and contribute to managing differences within the broader economic relationship.

COMMENTARY

EU–China ties: De-risking efforts amid persistent economic interdependence

Relations between the European Union and China continue to be shaped primarily by economic considerations, with trade imbalances and market access remaining central issues. While the EU has advanced its “de-risking” agenda since 2023—seeking to reduce strategic dependencies without full decoupling—implementation has been uneven, and economic interdependence remains significant.

Proposed measures such as the Industrial Accelerator Act and revisions to the EU Chips Act aim to strengthen domestic capacity in sectors including clean technology and critical raw materials. At the same time, trade data indicate continued growth in Chinese exports to Europe, alongside sustained investment by European firms in the Chinese market.

Geopolitical developments, including tensions in West Asia, have so far played a limited role in shaping EU–China relations. Some analysts suggest that a more direct Chinese role in regional conflicts could affect the relationship, though such scenarios remain speculative.

The Eurasia Dispatch Take: China’s take on the issue is that “interdependence is not a risk; intertwined interests are not threats; and openness and cooperation will not weaken economic security”. This perspective has not been fully embraced by the European Union, where concerns over dependencies and resilience continue to shape policy.

Recent developments nevertheless point to continued engagement. The visit by a European Parliament delegation to China, alongside plans to establish a bilateral working group on trade and investment, provides additional channels for dialogue. These initiatives may help facilitate more detailed exchanges and contribute to a clearer understanding of each side’s policy approach.

BEFORE YOU GO

EU-China trade ties and an EP delegation visit to China have shaped the Eurasian discourse over the past weeks. Developments on these fronts will reverberate across global politics, trade, and defence. If you are interested in how these processes evolve, stay tuned for further updates in the next issue of Eurasia Dispatch! Thank you for reading, and we’d love to hear your thoughts—feel free to share your insights and feedback.

Until next time,

Eurasia Dispatch

Disclaimer: I manage this Substack account independently, in my personal capacity. The views expressed are my own and do not represent the views of my affiliated institutions.

Welcome to the latest issue of the newsletter! As always, there is a lot to unpack, so let’s get down to business.

This week, Eurasia Dispatch covers:

• Institutions

  • ‘EU Inc.’ proposal seeks to simplify startup rules across the Single Market

• Member states

  • Sweden flags rising security risks amid Iran conflict and hybrid threats

• Business

  • EU court opinion signals stronger legal basis for 5G supplier restrictions

• Commentary

  • Quantum: From labs to infrastructure and governance

INSTITUTIONS

‘EU Inc.’ proposal seeks to simplify startup rules across the Single Market

The European Commission has proposed a new optional corporate framework, known as “EU Inc.”, aimed at simplifying how companies establish and operate across the European Union. The initiative would introduce a single set of EU-wide rules, allowing firms to register within 48 hours through a fully digital process and operate across member states without navigating multiple national systems.

The proposal responds to longstanding concerns that regulatory fragmentation — spanning 27 legal systems and numerous company structures — slows expansion and increases costs. EU Inc. is designed primarily to support startups and scale-ups, offering streamlined procedures, simplified insolvency processes, and harmonised mechanisms such as employee stock options.

While companies would gain easier access to the Single Market, they would remain subject to national labour laws, taxation, and other domestic regulations. The initiative aims to strengthen European competitiveness, particularly in relation to the United States and China. The proposal now requires approval from member states and the European Parliament.

The Eurasia Dispatch Take: The proposal forms part of the European Commission’s broader Startup and Scale-up Strategy and is accompanied by a recommendation establishing common definitions for innovative enterprises, startups, and scale-ups. Together, these measures aim to provide companies with a more consistent regulatory framework across the European Union, while improving access to targeted regulatory and financial support. In addition to simplifying company law, the strategy includes funding measures, though the scale and allocation remain less clearly defined. The combined approach is intended to support business formation and expansion within the EU.

MEMBER STATES

Sweden flags rising security risks amid Iran conflict and hybrid threats

Sweden’s security service has warned of a worsening security environment, citing both geopolitical tensions and ongoing hybrid threats in its latest national assessment. The agency said the conflict involving Iran has heightened risks to certain targets within Sweden.

Authorities noted that state actors may seek to exploit existing criminal networks, which have been associated with rising gang-related violence in recent years, to carry out influence operations or attacks. While Iran has long been considered a security concern, the current escalation in West Asia has added a new layer of risk.

The report also highlights broader challenges linked to hybrid activities. China and Russia are identified as key actors in this domain. Moscow is implicated particularly in the context of the war in Ukraine, although Moscow denies involvement in alleged incidents. Sweden has examined numerous suspected cases of sabotage targeting infrastructure, including energy and communications systems, but has not definitively attributed these to specific states.

The Eurasia Dispatch Take: The outlook for European security is increasingly uncertain. Rather than easing, regional conflicts appear to be multiplying and worsening. This is compounded by the gradual withdrawal of the United States’ security umbrella and Europe’s still limited capacity for self-defence, at least in the near term. In the interim, Europe will likely need to rely on existing resources and deepen cooperation with non-American defence partners to safeguard its interests. This approach may serve as a stopgap until current initiatives aimed at strengthening European defence capabilities begin to take effect.

BUSINESS

EU court opinion signals stronger legal basis for 5G supplier restrictions

An opinion from a senior legal adviser to the EU’s top court has clarified the bloc’s authority to restrict telecom suppliers deemed ‘high risk’. The adviser stated that such rules can be set at the EU level rather than solely by national governments, and that telecom operators are not automatically entitled to compensation for replacing affected equipment.

The case, brought by Estonian operator Elisa, challenges both the EU’s competence and the financial burden of removing Huawei infrastructure. The opinion indicates that national authorities may rely on EU guidance when imposing restrictions, though measures must remain subject to judicial review and proportionality.

If the opinion is upheld by the Court of Justice of the European Union later this year, the resulting ruling could reinforce ongoing efforts in European Commission policy to reduce reliance on external suppliers in critical networks. It also suggests telecom operators may face limited prospects for compensation, despite the significant costs associated with replacing existing equipment.

The Eurasia Dispatch Take: The implications are wide-ranging. Huawei faces mounting pressure in Europe, where it is already subject to restrictions in several countries and ongoing scrutiny. More broadly, the shift may reinforce perceptions in China that the European Union is aligning closely with the United States regulatory approaches.

There could also be indirect consequences for European telecom operators operating in China, potentially complicating market access or regulatory conditions. Overall, the developments point to a landscape in which commercial and geopolitical considerations are increasingly intertwined, with security concerns taking precedence even as they impose costs on industry and risk further straining economic ties.

COMMENTARY

Quantum: From labs to infrastructure and governance

According to a recent analysis by the International Institute for Strategic Studies, advances in quantum technology are shifting from laboratory research to the governance of infrastructure. As systems near practical deployment in communications, sensing, and cryptography, the focus is turning to how they are built, regulated, and integrated at scale.

Three distinct approaches are emerging. The United States emphasises coordination between innovation, security policy, and allied supply chains. China is pursuing a state‑led model that links research, industrial policy, and deployment. European Union strategies rely more on regulatory alignment and standards-setting to offset more limited industrial capacity.

Two factors are likely to shape outcomes. The first is access to specialised supply chains, where dependence on scarce components creates potential bottlenecks. The second is institutional capacity to absorb and deploy new systems, including the transition to post-quantum cryptography.

Diverging governance models may lead to fragmentation across technological ecosystems, with third countries navigating between competing standards, supply networks, and regulatory frameworks as quantum systems move towards wider adoption.

The Eurasia Dispatch Take: The key actors are reinforcing their respective strengths. The United States is leveraging its network of alliances and partnerships, while China is relying on its capacity for long-term strategic planning and coordinated execution. For European Union countries, the central challenge lies in translating strong research capabilities into broad deployment.

This transition is constrained by factors such as coordination across multiple member states and access to specialised materials and components. While these strategic approaches are not inherently incompatible and leave scope for cooperation, collaboration remains difficult given the sensitivity of quantum technologies and their links to security and economic competitiveness.

BEFORE YOU GO

Hybrid threats, telecom network restrictions, and quantum technology governance have shaped the Eurasian discourse over the past weeks. Developments on these fronts will reverberate across global politics, trade, and defence. If you are interested in how these processes evolve, stay tuned for further updates in the next issue of Eurasia Dispatch! Thank you for reading, and we’d love to hear your thoughts—feel free to share your insights and feedback.

Until next time,

Eurasia Dispatch

Disclaimer: I manage this Substack account independently, in my personal capacity. The views expressed are my own and do not represent the views of my affiliated institutions.

Welcome to the latest issue of the newsletter! As always, there is a lot to unpack, so let’s get down to business.

This week, Eurasia Dispatch covers:

• Institutions

  • U.S. investigations rattle global commerce; the EU is also in the crosshairs

• Member states

  • Finland warns of sustained cyber espionage from Russia and China

• Business

  • Geely’s autonomous driving system wins EU approval

• Commentary

  • Infrastructure deals become a new front in global space competition

INSTITUTIONS

U.S. investigations rattle global commerce; the EU is also in the crosshairs

The administration of Donald Trump has initiated two new trade investigations aimed at rebuilding tariff leverage following a recent court ruling that curtailed parts of its earlier tariff programme. The probes, led by the Office of the United States Trade Representative, focus on alleged excess industrial capacity and production across major trading partners and concerns related to labour practices in global supply chains.

The investigations cover a wide range of economies, including China, the European Union, Japan, and India. It will assess whether structural overcapacity in sectors such as automotive manufacturing distorts global markets. U.S. officials argue that expanding production, particularly in electric vehicles, may exceed domestic demand and contribute to trade imbalances.

A parallel investigation will examine labour practices in supply chains across more than 60 countries. Washington has previously raised allegations regarding labour practices in China’s Xinjiang Uyghur Autonomous Region, which Beijing has rejected. The new probe could broaden existing restrictions on imports linked to such concerns.

The Eurasia Dispatch Take: The move by the United States adds further uncertainty to an already strained global economic environment. It may provide the administration of Donald Trump with additional leverage ahead of an upcoming meeting with President Xi Jinping, the timing of which remains unclear.

Beyond bilateral talks, the investigations could also be used to extract closer alignment from U.S. partners on broader geopolitical issues, including developments in West Asia. However, such an approach carries risks. While tariffs and trade probes can strengthen negotiating positions in the short term, they may also strengthen the perception of unpredictability in U.S. policy.

For many countries, this raises questions about the durability of agreements and the broader stability of the international trading system. If uncertainty persists, partners may become more cautious in making concessions, particularly if they doubt whether existing commitments and norms will be consistently upheld.

MEMBER STATES

Finland warns of sustained cyber espionage from Russia and China

Finland’s security authorities have warned that cyber espionage and influence operations by foreign powers remain a persistent threat to the country’s institutions and technology sector. In a new national security assessment, the Finnish Security and Intelligence Service said intelligence services from Russia and China continue to target government systems, research institutions, and companies working on advanced technologies.

The agency said cyber espionage is the most significant digital threat facing the country, with attempts to steal sensitive data and research expected to continue for the foreseeable future. Universities and private firms are increasingly seen as attractive targets because of the valuable research and development information they hold.

Finland’s growing geopolitical importance has heightened intelligence interest. The country joined NATO in 2023 following Russia’s invasion of Ukraine, a move that has reshaped the regional security environment and intensified espionage activity.

According to the report, foreign intelligence services are combining cyber intrusions with traditional espionage and influence campaigns aimed at shaping political debate. As Finland deepens its integration with Western security and technological networks, authorities expect such operations to remain a constant feature of the country’s threat landscape.

The Eurasia Dispatch Take: Finland’s warning comes less than a year after Czechia accused China of being behind cyberattacks targeting its foreign ministry. Such allegations add further strain to already complex relations between Beijing and the European Union. The Finnish claims also emerge in a somewhat different context. In recent months, China’s bilateral relations with several EU member states have been among the more stable aspects of the broader EU–China relationship. Chinese state media have pointed to what they describe as a more pragmatic approach by some European governments towards cooperation with Beijing. Reports of cyber espionage risk are placing that pragmatic trend under pressure.

BUSINESS

Geely’s autonomous driving system wins EU approval

Chinese carmaker Geely has secured certification in the European Union for its advanced driver-assistance technology, marking a significant step for Chinese automotive innovation in the European market. The approval allows vehicles equipped with the company’s G-ASD smart driving system to be sold in certain EU countries without requiring additional national certification.

The system, unveiled at the Consumer Electronics Show 2026 in Los Angeles, is an AI-powered platform designed to support level 3 and level 4 autonomous driving. At level 3, the vehicle can manage key driving functions such as steering, braking, and acceleration while monitoring its surroundings, although the driver must remain ready to intervene if necessary. Level 4 systems allow fully autonomous operation under specific conditions, similar to robotaxi services being developed elsewhere.

Geely plans to deploy the technology across several of its brands sold in Europe, including Zeekr, Lynk & Co, and Lotus. The rollout is expected to begin in mid-2026, though it remains unclear whether the system will also appear in models produced by Geely’s Swedish subsidiary, Volvo Cars.

The Eurasia Dispatch Take: The development adds to the competitive pressure facing European carmakers, many of which are already struggling to keep pace with the innovation speed and price competitiveness of their Chinese counterparts. Manufacturers from China have rapidly expanded their presence in electric vehicles and related technologies, challenging established players in the European Union market.

Further competition is on the horizon. BYD is preparing to introduce ultra-fast charging electric vehicles, while several Chinese manufacturers are planning to expand into new segments. More than six companies, including BYD, Farizon Auto — part of the Geely group — and start-up Windrose Technology, aim to launch heavy-duty electric trucks in Europe in 2026.

COMMENTARY

Infrastructure deals become a new front in global space competition

Competition in the space sector is increasingly extending beyond rockets and satellites to the less visible infrastructure that supports national space programmes. A recent analysis by the Prague Security Studies Institute highlights how international partnerships, financing arrangements, and technology supply agreements are shaping influence in emerging space markets.

According to the study, both China and Russia have expanded cooperation with countries seeking to develop their space capabilities. These partnerships often involve comprehensive packages that may include satellites, launch services, ground stations, and positioning, navigation, and timing systems. For countries with limited technical capacity or financing options, such arrangements can provide a relatively accessible entry point into the space sector.

The research examined hundreds of agreements worldwide and found that China has become a particularly active partner in this area, surpassing Russia in the number of projects concluded with emerging space nations.

Countries including Venezuela, Brazil, Nigeria, and Cambodia have entered into cooperation agreements covering satellite systems and ground infrastructure. Such partnerships can shape long-term technological and operational ties.

The report argues that these developments illustrate how space competition is increasingly tied to broader economic and technological relationships, particularly as new countries seek to build domestic space capabilities.

The Eurasia Dispatch Take: The findings could carry practical implications for European policymaking, particularly as the European Union moves forward with initiatives such as the proposed EU Space Act. Insights into how major powers build long-term partnerships in the space sector may inform Europe’s approach to cooperation with emerging space nations.

At the same time, competing directly with the scale of programmes pursued by China and Russia may prove difficult. The EU is already trying to strengthen its position across several strategic areas, including artificial intelligence, the semiconductor industry, and critical raw materials.

Nevertheless, maintaining engagement with countries seeking to develop their space capabilities remains important. A balanced approach could allow Europe to support partnerships and cooperation without overstretching resources. Such initiatives could complement existing industrial and technological strategies as part of a more integrated policy framework.

BEFORE YOU GO

Breakneck innovation in the automotive industry, China’s and Russia’s support to enhance space infrastructure, and persistent uncertainty in global trade arrangements have shaped the Eurasian discourse over the past weeks. Developments on these fronts will reverberate across global politics, trade, and defence. If you are interested in how these processes evolve, stay tuned for further updates in the next issue of Eurasia Dispatch! Thank you for reading, and we’d love to hear your thoughts—feel free to share your insights and feedback.

Until next time,

Eurasia Dispatch

Disclaimer: I manage this Substack account independently, in my personal capacity. The views expressed are my own and do not represent the views of my affiliated institutions.