This article is based on ideas originally published by VoxEU – Centre for Economic Policy Research (CEPR) and has been independently rewritten and extended by The Economy editorial team. While inspired by the original analysis, the content presented here reflects a broader interpretation and additional commentary. The views expressed do not necessarily represent those of VoxEU or CEPR.
This article is based on ideas originally published by VoxEU – Centre for Economic Policy Research (CEPR) and has been independently rewritten and extended by The Economy editorial team. While inspired by the original analysis, the content presented here reflects a broader interpretation and additional commentary. The views expressed do not necessarily represent those of VoxEU or CEPR.
This article is based on ideas originally published by VoxEU – Centre for Economic Policy Research (CEPR) and has been independently rewritten and extended by The Economy editorial team. While inspired by the original analysis, the content presented here reflects a broader interpretation and additional commentary. The views expressed do not necessarily represent those of VoxEU or CEPR.
ASML’s Position as a Key Semiconductor Equipment Maker Under Threat Market Cap Plunges Amid U.S.-China Tensions and Rising Pressure ASML Rewrites Its Survival Strategy, Expands Lobbying Efforts
ASML, the Dutch semiconductor equipment company widely regarded as a key player in the global chip supply chain, has taken a direct hit from the U.S.-China tariff war. Facing mounting challenges from export restrictions to China and uncertainty surrounding U.S. trade policy, ASML has seen its market capitalization shrink by nearly half in less than a year—shaking its industry dominance. Caught at the crossroads of supply chain interests and national security strategies, the company is now rethinking its long-term strategic direction.
According to The New York Times on the 8th (local time), Christophe Fouquet, CEO of ASML, stated in a recent interview, “U.S. government policy alone is destabilizing the semiconductor supply chain that has taken decades to build,” adding that “this could slow the development of artificial intelligence (AI) and instead accelerate China’s efforts to domestically develop semiconductor technologies.”
ASML, a Dutch company, produces extreme ultraviolet (EUV) lithography machines—each priced at around $400 million and requiring parts shipped in on multiple trucks. Often dubbed “the most complex machine in the world,” EUV tools are critical to manufacturing next-generation chips for smartphones, AI processors, and autonomous vehicles. These machines rely on components supplied by hundreds of companies across the U.S., Europe, and Asia, making global cooperation essential to their production.
ASML’s rise is largely credited to decades of unwavering investment. After listing on the New York and Amsterdam stock exchanges in 1995, ASML began focusing on EUV, firmly believing it would be the future of chipmaking. Although the technology was seen as too complex and risky by competitors, ASML persisted. The first prototype was delivered for testing to a Belgian research center in 2006, and it took another 12 years before commercial deployment began in 2018.
Another key to ASML’s success was its tight control over the supply chain. The company acquired firms with essential technologies early on, nurturing proprietary innovation within its own ecosystem. A prime example is its €950 million (approx. $1.4 billion) acquisition of San Diego-based light-source manufacturer Cymer in 2013. ASML’s former CTO Martin van den Brink told MIT Technology Review, “Our success depends on their success,” referring to the pivotal role of acquired firms’ technologies in ASML’s competitiveness.
ASML now finds itself navigating a rapidly shifting business environment. Former President Donald Trump recently announced 50% tariffs on European products—only to retract the move two days later—creating policy volatility. Meanwhile, the Dutch government’s talks on easing export restrictions to China collapsed with the fall of its cabinet. The U.S. has been pressuring the Netherlands to block EUV exports to China since 2019, and even the Biden administration later expanded restrictions to include older-generation equipment.
These export controls on China, driven by intensifying U.S.-China tech rivalry, have become a major strategic risk for ASML. With bans on EUV and High-NA lithography equipment exports to China in place, a key revenue stream has been severely disrupted. Whereas China accounted for 50% of ASML’s revenue in Q2 last year, that share has since dropped to 25%.
ASML’s market capitalization has also taken a hit. From a peak of $429.5 billion (approx. ₩583 trillion) in July last year, it has fallen to below $260 billion (approx. ₩352 trillion) as of the close on June 8—representing a 30% drop in less than a year. Stéphane Houri, an analyst at French investment bank ODDO BHF, explained, “Concerns over U.S. export controls on China are weighing heavily on all semiconductor equipment manufacturers.”
Beyond immediate revenue losses, restrictions on exports to China are also undermining ASML’s ability to maintain its technological edge. With expensive EUV systems now excluded from the Chinese market, ASML’s path to recovering earnings has become increasingly complicated—prompting broader discussions about possible structural shifts in the global semiconductor supply chain.
Despite its unmatched technological leadership, ASML finds itself vulnerable to geopolitical forces. The U.S. is politicizing global supply chains under the banner of national security, while China views this as a form of technological containment and is doubling down on self-reliance. Reports suggest Chinese firms, including Huawei, are actively recruiting former ASML employees to help develop domestic alternatives.
Observers say ASML is trapped in a geopolitical gray zone with no clear ally. Former CEO Peter Wennink once described the situation as a “decades-long ideological war,” signaling that technical leadership alone is no longer enough to survive. This implies that companies like ASML must go beyond product innovation and consider geopolitical positioning, diplomatic strategy, and security risks in their corporate planning.
ASML is now facing the challenge of finding balance between a U.S. that wants to weaponize its technology and a China that is determined to retain access. The resulting tension between corporate technological independence and national strategic dependency exemplifies the broader dilemma faced by many global tech firms—and may reshape Europe’s own semiconductor strategy.
In response to this shifting landscape, nine EU countries, led by the Netherlands, have formed the Semicon Coalition. On March 12, Austria, Belgium, Finland, France, Germany, Italy, Poland, Spain, and the Netherlands signed a joint declaration in Brussels to establish the coalition. Proposed by Dutch Economic Affairs Minister Micky Adriaansens, the initiative aims to strengthen the EU's semiconductor capabilities through expanded production, accelerated innovation, and deeper cooperation across the value chain.
In parallel with regional efforts, ASML is expanding its lobbying footprint—adding teams in Washington, Brussels, and The Hague. CEO Christophe Fouquet emphasized, “We cannot allow politics to undermine technology,” warning that “intensifying protectionism under the guise of national security will ultimately slow technological progress for everyone.”
Profitability Remains Elusive Despite Facility and Process Optimization ‘Growth Fatigue’ Spreads Across China’s Auto Industry More Companies Choose to Steer Clear of Chinese-Made Vehicles
Amid its success in streamlining production, China’s electric vehicle (EV) industry is facing mounting criticism for falling into a profitability crisis caused by oversupply. In particular, BYD’s aggressive low-price strategy has proven effective in boosting short-term market share, but experts argue it has undermined the industry's overall profit structure and raised questions about long-term sustainability. Analysts now suggest that the next phase for the EV sector must go beyond simple price competition and focus on restructuring supply chains and rebuilding sustainable profit models.
According to Chinese media such as the Securities Times on the 8th, Li Shufu, chairman of Geely Automobile, gave a keynote speech at the China Auto Forum in Chongqing the previous day. “While competition in the domestic auto industry is very dynamic, it’s becoming uncomfortable to even talk about how some companies are competing,” Li remarked. Although he did not name names, industry insiders interpreted his remarks as a thinly veiled criticism of BYD’s recent aggressive price cuts.
Li went on to say, “The global auto industry is currently facing a severe state of overproduction,” adding, “We’ve decided not to build any new automobile manufacturing plants.” He emphasized the need to maximize existing global production capacity by promoting practical cooperation and resource coordination: “Only then can we leverage skilled technical labor and mature quality assurance systems,” he said, stressing the importance of improving the efficiency of excess production capacity.
Indeed, China’s EV industry has experienced rapid growth in recent years. Backed by large-scale government subsidies and policy support, many companies have expanded EV production lines across the country. These companies achieved high levels of automation across the value chain—from battery production to vehicle assembly and delivery—making China home to one of the world’s most advanced and fastest EV manufacturing ecosystems.
The problem lies in the lack of demand to absorb the surging supply. This oversupply has destabilized market equilibrium, and companies are now facing deteriorating profitability. Analysts say the industry has reached a point where “making more is no longer the solution.” The notion that market expansion can continue based solely on overproduction is becoming increasingly untenable. One industry source remarked, “This is an early sign that the bubble in China’s EV industry is beginning to burst,” adding that, “Efficiency in production has shifted from being a growth driver to becoming a destroyer of profitability.”
This is why BYD’s low-price strategy is increasingly seen as reaching its limits. BYD has adopted an aggressive pricing model, mass-producing EVs priced around USD 10,000 and targeting emerging markets, including Europe, Southeast Asia, and South America. This strategy has put global carmakers at a price disadvantage, helping BYD become the world’s top-selling EV maker last year.
However, critics argue that this approach fails to deliver a sustainable profit model. At the same forum on the 7th, Yin Tongyue, chairman of Chery Automobile, criticized such practices, saying, “We won’t participate in reckless price cuts that ride market trends at the expense of a healthy competitive environment.” He likened the practice to “drinking poison to quench thirst,” a Chinese proverb (饮鸩止渴, yǐn zhèn zhǐ kě) referring to a desperate short-term fix with dangerous long-term consequences.
Rather than being driven by advanced technology, BYD’s ultra-low pricing hinges on mass production infrastructure, labor cost reduction, and tight supply chain integration. But with raw material prices rebounding and battery tech competition intensifying, maintaining quality at low cost is becoming increasingly difficult. Tougher global regulations have also raised safety and environmental compliance standards—creating new hurdles that cheap cars alone can’t overcome. As a result, BYD remains stuck in a high-volume, low-margin model.
Worse still, BYD’s pricing tactics are weakening profitability across the broader Chinese EV sector. At the end of last month, the company announced price cuts of up to 34% on 22 models, including major products such as the Seagull and Seal. Competitors quickly followed suit, igniting a race to the bottom that threatens the industry’s earnings structure. With China’s EV market growth slowing, experts warn that this cutthroat price war could ultimately damage the industry’s long-term ecosystem.
As China’s EV oversupply sends shockwaves through global markets, Korean companies are turning to supply chain restructuring as a solution. Hyundai Motor, in particular, is aggressively pursuing localization strategies in the U.S., where it is currently building a large-scale EV production plant in Georgia and strengthening its partnerships with local parts suppliers. This move goes beyond simply securing an assembly base; it reflects a strategic effort to sidestep Chinese-made components and secure alternative supply chains.
Hyundai’s localization strategy also serves as a way to navigate U.S. regulatory hurdles. The Biden administration’s Inflation Reduction Act (IRA), designed to tackle climate change, restricts benefits for EVs that contain Chinese parts. The strategy is also seen as effective in boosting brand image, especially as American consumers harbor strong political and emotional resistance to Chinese brands. Hyundai aims to position itself as a “non-Chinese premium brand” in the U.S. market.
However, doubts remain as to whether this strategy can work as effectively outside of the U.S. In regions like Europe, Southeast Asia, and the Middle East, price competitiveness is still a key factor, and Chinese brands like BYD continue to dominate with their low-cost offerings. In markets where local production infrastructure is lacking, Hyundai vehicles become imports, making them vulnerable to higher logistics costs and unfavorable tax structures.
Experts agree that Korean firms need more than just relocating factories to survive the long-term fallout from China’s supply glut. A more fundamental strategic shift is needed—one that reflects regulatory trends, consumer sentiment, and cost structures across different markets. Professor Huh Dae-shik of Yonsei University’s School of Business noted, “Hyundai’s localization strategy is highly effective at the moment,” but cautioned, “As the global EV ecosystem evolves, continuous adaptation will be essential for long-term survival.”
Large Population and Expanding Domestic Market Raise India’s Appeal But Infrastructure Imbalances and Geopolitical Uncertainties Remain More Investors Focus on India’s Long-Term Trajectory
As U.S.-China tensions persist, global manufacturers are accelerating their shift away from China, and India is rapidly emerging as a leading alternative. India is projected to post one of the highest economic growth rates in the world this year. Backed by strong government policies to promote manufacturing and the scale of its vast domestic market, the country is actively working to attract global companies.
While uncertainties remain—such as the U.S.'s reshoring policies—markets increasingly view India as a country favored by time, with momentum growing for long-term investment.
As U.S.-China tensions persist, global manufacturers are accelerating their exit from China, and India is rapidly emerging as a compelling alternative. According to industry sources on the 9th, the International Monetary Fund (IMF) projected in its World Economic Outlook last month that India’s GDP will reach the fourth-largest in the world this year. The IMF stated, “India’s GDP is expected to reach USD 4.187 trillion, slightly surpassing Japan’s USD 4.186 trillion, positioning it as the fourth-largest economy in the world.”
This forecast stems from the global manufacturing sector’s search for alternatives amid the “China exodus.” As uncertainties around the Chinese market grow due to prolonged U.S.-China tensions, multinational companies are accelerating efforts to diversify their supply chains. India has emerged as the strongest contender in this reshuffling — not only is it the world’s most populous nation, but it also boasts a vast and growing domestic market. Moreover, India is seen as one of the few emerging economies that offers both political stability and an open economic structure.
India’s economic performance has been remarkable. The United Nations revised its economic outlook last year, raising India’s projected GDP growth from 6.2% to 6.9%. The IMF offered a similar estimate of 6.8%, while even the typically conservative Organisation for Economic Co-operation and Development (OECD) forecasted a 6.7% growth rate. These institutions share a consistent view: India’s abundant and low-cost labor force, combined with a steadily improving infrastructure, will accelerate its transition toward a manufacturing-driven industrial structure.
However, this rosy outlook did not fully materialize last year. India posted a growth rate of 6.5%, its lowest in four years — a notable slowdown since the pandemic recovery. As the base effects from post-COVID rebounds faded, India’s high-growth momentum weakened. The fact that India’s performance fell short of market expectations is a reminder that the country still faces hurdles in firmly establishing itself as a central hub in global supply chains.
Adding further uncertainty is the policy direction of the Trump administration, which is expected to influence global supply chains significantly. Observers warn that the U.S.’s push for stronger protectionism and reshoring of domestic industries could pose challenges for manufacturing-focused nations like India. Sam Jo Kim, an economist at EFG Asset Management, commented, “India is likely to maintain around 6.5% growth through the 2025–2026 fiscal years, but U.S. tariff policies remain a major wildcard. The key will be how successfully the Indian government navigates negotiations with the U.S.”
Another pressing issue is India’s uneven infrastructure. Due to disparities in logistics networks, electricity supply, and education levels between major metropolitan areas and smaller cities, foreign companies continue to concentrate their investments in the capital region. Unlike IT and service industries, manufacturing requires advanced physical infrastructure. Thus, voices are growing louder for more balanced infrastructure investment to truly transform India into a manufacturing hub.
Despite these headwinds, global markets still tend to view India as a long-term investment destination. Structural advantages such as demographic trends, domestic consumption potential, and the direction of government industrial policies are seen as outweighing temporary growth slowdowns or geopolitical uncertainties. From the perspective of multinational corporations, it is increasingly seen as more rational to bet on long-term potential rather than hold out for ideal near-term conditions.
The Indian government is also actively working to attract production facilities by offering tax incentives, relaxing foreign direct investment (FDI) regulations, and expanding production-linked incentives (PLI). Aggressive investment in infrastructure, such as roads, ports, and telecommunications, is rapidly improving logistics and manufacturing environments. These policy moves are part of the government’s overarching “Self-Reliant India” strategy, which many see as a defining difference between India and other emerging economies.
Major global companies are stepping up their investment in India. Tesla has publicly discussed the possibility of building a production facility in the country, while Apple is in the process of shifting a substantial portion of its iPhone production to Indian plants. Automakers like Japan’s Toyota and France’s Renault are also expanding joint ventures in India. Tech giants like Samsung Electronics and Micron are moving forward with concrete plans to increase production in the country.
These developments bolster the view that India may not just replace China in global supply chains, but could become a new central hub in its own right.
U.S. Suspends Nuclear Equipment Export Licenses to China Will China’s Nuclear Industry Development Plans Be Disrupted? Southeast Asia Emerges as a Dark Horse in the Global Nuclear Market
In a sharp escalation of strategic tensions between the United States and China, Washington has decided to halt the export of nuclear power equipment to Beijing. This latest move goes far beyond tariffs—it strikes at the core of a sector crucial to China's long-term energy and geopolitical goals. The decision underscores how the once trade-focused U.S.-China conflict has evolved into a full-spectrum competition over critical technologies, industrial supply chains, and national security.
For China, the blow is especially damaging. The nation has been investing heavily in nuclear energy, not only to address its massive carbon emissions but also to position itself as a global leader in advanced power generation. The suspension of U.S. exports threatens to disrupt key components in China's reactor development pipeline—casting doubt over whether Beijing can maintain the momentum it has worked so hard to build. Meanwhile, as China's ambitions hit a snag, a new player is quietly stepping into the spotlight: Southeast Asia.
According to a report by Reuters on June 6, the U.S. Department of Commerce recently informed American nuclear equipment manufacturers that export licenses for shipments to China have been suspended. This directive directly impacts companies such as Westinghouse and Emerson—industry giants that supply essential components for nuclear power plant operations. The financial fallout is projected to reach several hundred million dollars, underscoring just how integral China has become to the global nuclear supply chain.
The timing of the decision is notable. It follows high-level trade talks held in Geneva between June 10 and 11, where the U.S. and China had agreed in principle to gradually ease tariffs and dismantle non-tariff barriers—a tentative step toward resolving long-standing economic disputes. However, those fragile gains quickly unraveled amid a new flare-up: the issue of China’s export restrictions on rare earth minerals. The United States accused China of failing to lift key restrictions, a violation of the Geneva spirit. China, in turn, denied the claims and countered by criticizing U.S. export controls and visa cancellations for Chinese students.
Against this backdrop of deepening distrust, the U.S. Department of Commerce on May 28 announced it would "reassess exports to China of strategically important products." As part of this reassessment, Washington made clear it would either suspend existing export licenses or impose additional restrictions during the review period. Nuclear power equipment was only the beginning. In the past two weeks alone, the U.S. has expanded export restrictions to other high-value industrial sectors, including hydraulic fluids and jet engines—signaling a broader campaign to curb China's technological advancement.
The U.S. export freeze poses a serious threat to China's nuclear strategy—one that Beijing has cultivated as a centerpiece of its energy transition and industrial modernization. China is currently leading the world in nuclear reactor construction. The expansion is part of its ambitious “dual carbon” (双碳) policy, first announced by President Xi Jinping at the UN General Assembly in September 2020. The goal: peak carbon emissions by 2030 and achieve carbon neutrality by 2060.
To achieve this, the Chinese government has pursued a bold, state-led expansion of nuclear energy. In August 2023, China’s State Council—its highest executive body—approved the construction of 11 new nuclear power units across five key provinces: Jiangsu, Guangdong, and three others. It was the largest number of approvals issued in a single year. According to Chinese financial media outlet Jiemian News, the total investment in these projects is expected to exceed 220 billion yuan (about USD 30 billion), with each project taking roughly five years to complete.
China’s nuclear sector is now being positioned as both a domestic energy solution and an export-oriented industry. It is no longer a follower in the field—it aspires to lead. The 2025 China Nuclear Energy Development Report published by the China Nuclear Energy Association (CNEA) predicts that if current development continues, China’s total operational nuclear capacity will reach 110 million kilowatts by 2030. That figure would place China among—or even above—the world’s top nuclear energy producers.
However, this trajectory is now under threat. Many of the critical components and technologies used in China’s nuclear reactors rely, either directly or indirectly, on foreign suppliers—especially from the United States. The U.S. sanctions are expected to disrupt this delicate supply chain, potentially delaying construction timelines, increasing costs, and limiting access to essential technologies. For a country that has made nuclear power central to its environmental and economic future, the ripple effects could be profound.
While China recalibrates its strategy in the face of tightening restrictions, Southeast Asia is quietly positioning itself as the next major growth zone for nuclear energy. Several countries in the region are revisiting shelved plans for nuclear development—driven not only by energy needs but also by the rising power demands of digital infrastructure, especially data centers.
Vietnam is a case in point. The country approved plans for two nuclear reactors in 2009 and had aimed to build 14 by 2030. But after the 2011 Fukushima disaster in Japan heightened safety concerns worldwide, Vietnam scrapped its nuclear program in 2016. In the years that followed, the country relied heavily on hydro and thermal energy. This dependence proved fragile. In the summer of 2023, extreme heat and drought caused a spike in electricity demand and a sharp drop in hydropower output. Blackouts followed, halting industrial production in parts of the country.
Recognizing the risks, Vietnam’s Communist Party Politburo made a landmark decision in November 2023 to resume nuclear power development. The Ministry of Industry and Trade, referencing the national Power Development Plan (PDP8), warned of severe capacity shortages between 2026 and 2030. PDP8, approved in May 2023, aims to double Vietnam’s power generation capacity from 80 GW in 2023 to at least 150 GW by 2030.
What’s fueling this urgency? Data. Massive power-hungry data centers are springing up across Southeast Asia as global tech giants race to tap into new digital markets. Microsoft has pledged USD 2.2 billion in investment for data center development in the region. Amazon is committing a staggering USD 11.2 billion. Google has already invested USD 9 billion, with another USD 1 billion planned. ByteDance, the parent company of TikTok, has announced an USD 8.8 billion investment in a new data center in Thailand over the next five years.
The implications are clear: Southeast Asia’s nuclear power ambitions are no longer theoretical. They are being catalyzed by a real and growing demand for stable, large-scale electricity, particularly from the booming digital economy. As China grapples with sanctions and strategic pushback, countries like Vietnam, Thailand, and others may find themselves well-positioned to fill the vacuum. In doing so, they could emerge as unexpected leaders in the next era of global nuclear power development.
"Global Auto Production at Risk Due to Rare Earth Export Controls" "China’s Ministry of Commerce to Expedite Rare Earth Export Permits for EU Companies" "China’s Rare Earth Card Sends Shockwaves Beyond the U.S. to the Entire World"
In the heart of the global race toward electrification, the automotive industry finds itself at the mercy of a powerful geopolitical gatekeeper—China. With the world’s most dominant rare earth refining capacity, Beijing’s latest export controls on these critical minerals have rattled the very foundation of global manufacturing. From high-performance electric motors to precision sensors, rare earth elements are the invisible fuel of modern vehicles. Now, as bottlenecks widen and factories slow down, the international community is grappling with the consequences of centralized resource control—and looking to China for reprieve.
Amid escalating tensions over rare earth supply disruptions, China has moved to address mounting concerns from the European Union by promising faster export approvals. On June 8, the Financial Times reported that the Ministry of Commerce of China announced the creation of a “green channel” to accelerate the screening and approval process for companies that meet specific criteria. He Yucheng, spokesperson for the Ministry, stated that rare earth materials are subject to international norms due to their dual-use nature—applicable in both military and civilian domains—justifying the country’s export control measures.
This policy clarification followed a high-level meeting on June 3 in Paris between China’s Minister of Commerce, Wang Wentao, and Maroš Šefčovič, the EU Commissioner for Trade and Economic Security. Šefčovič conveyed the EU’s serious concerns over delivery delays for key industrial products such as automobiles and home appliances. He urged China to either lift restrictions on civilian-use rare earth items or allow European companies to operate under annual import permits, offering a stable framework to navigate the new regulatory environment.
The backdrop to these talks was China’s decision, implemented on April 4, to place seven rare earth elements under strict export control—samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium. Exporters of these elements and their associated alloys, oxides, and compounds are now required to obtain prior approval from relevant authorities. To institutionalize oversight, China recently introduced a comprehensive online reporting system mandating disclosure of transaction volumes and client details, a move aimed at enhancing traceability but criticized for increasing bureaucratic friction.
The consequences of these policies have quickly become visible on the factory floor. Europe’s auto supply chain is showing signs of distress. The European Association of Automotive Suppliers (CLEPA) revealed that hundreds of export license applications had been submitted to Chinese authorities, yet only about 25% had been approved. As a result, several automotive parts manufacturers in Europe have seen their production lines grind to a halt.
The shockwaves have extended far beyond Europe. In the United States, Ford Motor Company was forced to suspend production for a week at its Chicago plant last month due to a lack of rare earth materials needed for its flagship Explorer SUV. In Germany, premium automakers like Mercedes-Benz and BMW have scrambled to secure sufficient stockpiles, intensifying their procurement efforts. Japan has also been hit: Suzuki halted production of its compact Swift model at the end of May due to similar constraints.
Rare earth elements are not merely niche materials—they are central to nearly every modern automotive subsystem. From automatic transmissions and power steering to lighting, sensors, and especially electric vehicle (EV) propulsion systems, these minerals play indispensable roles. Permanent magnets, for example, rely on neodymium, dysprosium, yttrium, and samarium to deliver high-output performance and thermal durability essential for electric motor efficiency. As the automotive sector accelerates toward full electrification, reliance on these rare earths is not only growing—it's becoming unavoidable.
While China's justification for export controls centers on national security, critics argue the broader impact has been disruptive and disproportionate. The Ministry of Commerce’s Bureau of Industrial Safety and Export Control—the unit responsible for issuing export permits—has been singled out for its slow and complex approval procedures. A Reuters report from June 7 highlighted that since May, this bureau has held exclusive authority over licensing for rare earth magnets, and its handling of the process has created a new choke point not only for the auto industry but also for the semiconductor and aerospace sectors.
This concentrated control has sparked alarm across global supply chains, leading to accusations that a small group of Chinese officials now wield immense power over critical manufacturing inputs. The EU Chamber of Commerce in China voiced strong criticism through its Secretary General, Adam Dunnett, who warned that the abrupt rollout of regulatory changes had already caused widespread confusion and operational delays across industries. He also emphasized that even products clearly intended for civilian use are being subjected to excessive scrutiny, complicating trade without clear justification.
Further compounding the issue, companies applying for export permits report being asked to submit detailed, proprietary technical data—information that, in many cases, constitutes sensitive intellectual property. Though China officially commits to processing license applications within 45 working days, the regulation includes a loophole: national security–related cases are exempt, effectively allowing authorities to delay approvals indefinitely. This lack of transparency and predictability has heightened unease within both global boardrooms and policy circles.
This article is based on ideas originally published by VoxEU – Centre for Economic Policy Research (CEPR) and has been independently rewritten and extended by The Economy editorial team. While inspired by the original analysis, the content presented here reflects a broader interpretation and additional commentary. The views expressed do not necessarily represent those of VoxEU or CEPR.
This article is based on ideas originally published by VoxEU – Centre for Economic Policy Research (CEPR) and has been independently rewritten and extended by The Economy editorial team. While inspired by the original analysis, the content presented here reflects a broader interpretation and additional commentary. The views expressed do not necessarily represent those of VoxEU or CEPR.
