The Chinese Ministry of Commerce has submitted a document warning the European Commission that the proposed Cybersecurity Act, which mandates vendor removal, could result in reciprocal actions against European companies in China.
China has issued a formal warning to the EU regarding potential retaliation if the new cybersecurity law excludes Chinese companies like Huawei and ZTE from critical European infrastructure.
According to the South China Morning Post, the Chinese Ministry of Commerce provided the European Commission with a 30-page document outlining that China might apply its Foreign Trade Law and Supply Chain Security Regulations to restrict trade and impose reciprocal bans on European firms if Chinese companies are treated unfairly.
The submission to the Commission took place on April 17, and MOFCOM spokesperson He Yongqian acknowledged this during a briefing on April 24. The main concern is the draft law’s ‘non-technical risk’ criteria, which China views as a political tool to exclude Chinese companies regardless of their security capabilities.
Details of the EU Cybersecurity Act
The revised EU Cybersecurity Act, announced on January 20, marks a significant shift in the EU’s network security approach. Since 2020, the EU’s ‘5G toolbox’ advised against high-risk vendors in 5G networks.
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Only 13 out of 27 member states had acted on this recommendation by the time the new law was announced, with major economies like Germany slow to respond, despite Huawei’s significant involvement in their 5G infrastructure as of late 2024.
The new law shifts from recommendation to obligation, requiring member states to remove equipment from high-risk suppliers within three years of the law being enacted.
It also allows the Commission to label a country as a ‘cybersecurity threat,’ extending exclusions beyond telecoms to 18 critical sectors including energy, transport, and IT.
Though it doesn’t name Huawei or ZTE, EU Tech Commissioner Henna Virkkunen stated that the law aims to secure critical supply chains. Strand Consult data shows Chinese vendors hold 33-40% of European 5G infrastructure, indicating that their removal would be unprecedented in scale.
China’s prior retaliatory actions add credibility to its threat
China has a history of retaliatory measures. After Sweden banned Chinese vendors from its 5G networks in 2020, Ericsson’s revenue in China dropped by 46% the following year and has not recovered. Nokia’s China revenues fell from approximately €2.5 billion in 2018 to roughly €913 million last year.
Nokia might face a total ban in China for national security reasons, with both Nokia’s and Ericsson’s combined Chinese market share shrinking to 3%.
China has already started restricting Nokia and Ericsson, the European companies that would benefit most from a Huawei ban, while warning the EU of repercussions if similar exclusions are formalized.
Nokia CEO Justin Hotard and Ericsson’s Börje Ekholm have highlighted the EU revenue potential from replacing Chinese equipment, making the stakes evident for their companies. Implementation challenges persist, given the UK’s and Germany’s struggles in meeting their own deadlines for phasing out Huawei equipment.
China’s stance and reasoning
China’s 30-page submission argues the ‘non-technical risk’ framework is inherently discriminatory, targeting firms based on their country of origin. It claims the law infringes on WTO principles of non-discrimination and proportionality.
Designating China as a cybersecurity concern could extend exclusions beyond telecoms, affecting sectors like clean energy and