Chip dependency, space vulnerability: Europe's tech dilemmas
EU-China trade strains, espionage concerns, and TikTok’s legal woes are in focus as well.
Dear Readers of Eurasia Dispatch,
Welcome to the latest issue of the newsletter! The Eurasia front has been busy since the previous edition. The media covered news and updates about EU-China trade frictions, a China-related espionage case in Germany, Europe’s space capabilities, and TikTok’s legal troubles.
Without further ado, let’s get down to business! This week, Eurasia Dispatch covers the following:
Institutions
Member States
Business
Commentary
INSTITUTIONS
Yet another China dependence: Low-tech chips
Less than two years ago, the EU set an ambitious goal in the European Chips Act: to achieve 20% global microchip market share by 2030. Based on the report published by the European Court of Auditors on 28 April, Brussels is already behind schedule. Local low-tech semiconductor suppliers like the German Infineon, the Dutch NXP, and French-Italian STMicroelectronics are unable to meet the EU’s internal demand, so their competitiveness on the global stage, and contribution to the EU’s self-sufficiency is limited. In 2024, Beijing was among the EU’s top suppliers of less advanced semiconductors and Brussels’s trade deficit in semiconductors with China stood at €9.8 billion. The auditors expect the situation to worsen as demand for low-tech chips is only going to increase due to their importance in green technologies. As the EU has an uncertain relationship with key chip suppliers, such as China or the U.S., such external dependence is a crucial vulnerability.
The Eurasia Dispatch Take: Apart from low-tech chips, the EU and its member states are also dependent on China in the fields of critical raw materials, wind turbines, 5G networks, and EV batteries. The EU has taken tentative steps toward countering these dependencies with new policy initiatives and funding. Considering that the EU is a late mover in most of these areas, it must manage the transition of continuing to buy these goods from China while simultaneously building indigenous capacity to produce them. It is a difficult endeavour, but the EU is well-positioned to do it, thanks to its economic importance and its increasingly equidistant position between Washington and Beijing.
Market share, small parcels, and import duties: Challenges in EU-China trade ties
Reports from the past weeks drew attention to friction points in EU-China trade relations. On 28 April, research by the German development bank KfW pointed out that Germany is losing export market share within the EU to China, and their competition will worsen due to Trump’s tariffs and their increasingly overlapping export profiles.
At the same time, France is lobbying for additional duties on small parcels to protect the European market from cheap Chinese fast fashion products. Another report suggested that France and other European states will advocate for ‘measures to protect the European steel industry’ from cheap Chinese imports.
What’s more, the European Commission announced that it has imposed duties of 20-67 percent on Chinese construction machinery ‘after concluding that the producers were benefitting from unfair subsidies and selling at artificially low prices.’
The Eurasia Dispatch Take: These developments come on the back of positive reports on the EU-China trade front in the past month. In early April, the EU and China agreed to restart negotiations on swapping the EU’s hefty import tariffs for minimum price commitments made by China-based electric vehicle manufacturers. Towards the end of April, a Global Times editorial sought to allay EU concerns about China potentially dumping cheap products on European markets in the wake of Trump’s tariffs. Regardless of China’s ongoing positive outreach toward the EU, commercial relations are mixed at best.
MEMBER STATES
German far-right politician’s former aide accused of spying for China
Jian Guo, a former aide of Maximilian Krah, a German far-right (Alternative for Germany, AfD) lawmaker was accused of obtaining and transmitting more than 500 EU Parliament documents in the 2019-2024 period to the Chinese intelligence service. He was also charged with collecting information about Chinese dissidents in Germany, as well as intelligence on military equipment transports. In response, the Chinese Foreign Ministry requested the German authorities ‘to stop smearing China and do something real to keep the sound momentum of development for bilateral relations.’
The Eurasia Dispatch Take: This is not the first time that the media has drawn attention to the mixed relationship between the AfD and China. In January, it was reported that the AfD wanted to limit Chinese companies’ involvement in German ports, arguing that those firms are effectively controlled by the Chinese Communist Party, hence they should have no influence over Germany’s critical infrastructure. In February, The Economist pointed to AfD leader’s China linkages grounded in her education and professional experience working for the state-owned Bank of China. Considering that AfD came in second during the February elections, their relationship with China could have a broader impact on German politics.
On the other end of the equation, reports like this could further damage China’s public image in Europe, as AfD was recently labelled as “extremist” by Germany’s domestic intelligence agency.
BUSINESS
Mega-fine on TikTok over data processing practices
Chinese-owned TikTok asserted for years that it did not keep American or European user data on Chinese servers. In April, however, it notified the Irish Data Protection Commission that some European Economic Area user data was indeed kept on servers in China. Subsequently, the Irish Data Protection Commission said that the company ‘sent the personal data of Europeans to China illegally and wasn’t transparent enough with users,’ and it imposed €530 million in fines on TikTok for breaching the EU’s General Data Protection Regulation. TikTok now has six months to rectify its data processing practices. The company plans to appeal against the ruling. After the ruling, the Chinese government stated that it “has never required and will never require companies or individuals to collect or store data through illegal means.”
The Eurasia Dispatch Take: The fine was the third-biggest penalty for breaking EU GDPR rules—the biggest was €1.2 billion doled out to Meta for transferring EU user data to the United States without sufficient data protection. The second biggest amounted to €746 million, which was imposed on Amazon for infringements in its advertising targeting system. The size of the fine imposed on TikTok suggests that this is not merely symbolic posturing by the authorities, but a reflection of genuine concerns about European user data ending up in the Chinese government’s hands due to improper handling. Considering that the EU is engaged in a war of attrition against Big Tech, more investigations might be coming TikTok’s way.
Chinese firms are having a rough time in Europe these days, as the fine on TikTok comes shortly after a corruption investigation into Huawei’s lobbying practices.
Businesses and Europe’s space race imperative
NATO’s Admiral Pierre Vandier told Politico that Europe needs to get its act together; otherwise, the U.S., Russia, and China will be the ones calling the shots in space. Space is an important theatre that supports war operations on Earth, and the domain itself is getting increasingly militarised with new space weapons going online.
Europe currently has very limited capability to support land operations with space assets or to defend its interests in space. The Ukraine conflict revealed that Europe is desperately dependent on SpaceX for battle communications and intelligence collection. According to Admiral Vandier, businesses can play a key role in Europe’s space capacity building, because satellites and constellations are dual-use, and the military relies on commercial infrastructure to support its goals. Europe needs to create a regulatory, financial, and tax environment that nurtures tech entrepreneur’s efforts to construct dual-use technology for Europe.
The Eurasia Dispatch Take: While the EU has made efforts to advance its self-reliance in semiconductors, critical raw materials, and defence in general, space seems to be a blind spot in the bloc’s agenda—in the recent EU Defence White Paper, space is not a priority area on its own right, but a part of “AI, Quantum, Cyber & Electronic Warfare.” While Chinese and Indian satellites are practicing dogfighting in space—demonstrating their capability to destroy satellites—the EU seems to be mostly focused on building a rules-based order in the domain for now. Talking about values is certainly cheaper than investing millions in the space tech industry, but values’ contribution to the EU’s indigenous space capacity development is limited.
COMMENTARY
India’s China+1 opportunity
Hemant Mohapatra, a Delhi-based partner at Lightspeed Venture Partners in India, wrote about ‘India’s Moment’ on Fortune. The author points to several developments that favour India. Apple is striving to relocate production from China to India; Taiwan’s PSMC has joined Tata Electronics to build a semiconductor fab in the country; and big tech companies like Nvidia, Meta, and Microsoft are increasing their investments as well. India is well-positioned to pioneer AI development due to the population’s affinity for the technology and the vast data accessible in the country. To seize the opportunity, India must step up sales and marketing services, capitalise on research-based engineering, nurture transformative thinking, and navigate geopolitical dynamics between the U.S. and China.
The Eurasia Dispatch Take: India is a land of opportunities, but many of those opportunities fall through due to inept implementation. Project Mausam was supposed to be ‘India’s answer to China’s Maritime Silk Road,’ but not much has happened on that front since 2014. Furthermore, the Production Linked Incentive Scheme aimed at turning India into a manufacturing hub, is set to lapse without achieving its goals. The list goes on—with the Spice Route, another failed Maritime Silk Road competitor, and the Connect Central Asia Policy, which failed to build a bridge between India and Central Asia. AI may differ thanks to Indian talent in the field, but the outlook is far from certain.
BEFORE YOU GO
Europe’s chip dependency, the continent’s lacklustre capabilities in space, and the mega-fine imposed on TikTok shaped the Eurasian discourse in the past week. Emerging developments on these fronts will reverberate across global politics, trade, and security. If you are interested in how these processes evolve further, 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.
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.