Beijing backs off amid Europe-chip tensions
China announced over the weekend that it will grant exemptions on certain semiconductor exports to European companies, marking a partial loosening of its recent restrictions. The move follows a row with the Netherlands over the takeover of Dutch chip-maker Nexperia (owned by China’s Wingtech) and the subsequent block on Chinese exports. In a statement, the Ministry of Commerce of the People’s Republic of China (MOFCOM) indicated that companies adversely affected by the export ban may apply for exemptions — a signal Beijing aims to de-escalate rather than fully reverse the ban.
The root of the dispute
The flashpoint was the Netherlands’ decision in September 2025 to nationalise control of Nexperia, citing national-security concerns over Chinese ownership and potential technology transfer. In response, China blocked exports from Nexperia’s Chinese-based operations, triggering alarm across European automotive supply chains. Europe warned that delayed chip- and rare-earth-metal exports were threatening manufacturing lines, including for car makers dependent on Nexperia components.
What exactly is changing
- European firms will now be able to apply for licenses to receive previously blocked exports from the Chinese arm of Nexperia, subject to MOFCOM review.
- Additionally, China confirmed a one-year pause on expanding rare-earth export controls that would have targeted European importers — a key part of the broader technology-and-trade dialogue with the European Commission.
- However, the regime of oversight remains in place — these are not full-scale free-trade flows resuming, but case-by-case exceptions under strong government supervision.
Why Beijing is stepping back (for now)
- China appears keen to avoid a sustained disruption in European supply chains, which could spill into retaliation, policy pushback or a broader technology decoupling.
- With global attention on chip sovereignty and supply-chain resilience, China is sensitive to the optics of being seen as weaponising exports.
- The timing coincides with renewed diplomatic engagement: Beijing has reopened dialogues with Europe following high-level meetings and is signalling a recalibration in its policy-toolkit.
The “long-game” caveats
- Although China is easing the ban, the exemptions do not represent a full rollback of its export-control system. The underlying legal architecture remains — Beijing retains the right to block or restrict as it sees fit.
- European firms and car-manufacturers warned of ongoing uncertainty, noting that fewer than half of priority licence applications under newer rules had been approved.
- The broader strategic environment remains tense: technology access, chip-manufacturing location, supply-chain diversification and U.S.–China competition continue to cast a long shadow.
What to watch next
- The approval rate of exemption applications for European firms: will China approve a meaningful share, or just enough to calm markets?
- Whether Europe responds with reciprocal measures or pushes for formal commitments to prevent future export-block spikes.
- The pace of manufacturing resumption at factories impacted by the ban, especially in the automotive and industrial-control sectors.
- Whether this accommodation is durable or merely a short-term thaw before restrictions tighten again in another policy phase.
The takeaway
China’s decision to ease its export ban on sensitive chip products to Europe signals a tactical retreat in a trade conflict, but not a strategic shift. While it provides relief to European firms and calms supply-chain anxieties, the core framework of export control remains intact. For now, both Beijing and Brussels appear willing to dial down escalation — but the next chapter may hinge on whether trust, transparency and predictability follow the concessions.
