China's reciprocal countermeasures against EU warranted

The Chinese Ministry of Commerce's decision on Friday to impose export controls on 14 European Union entities is measured and lawful reciprocity. It is a direct response to the EU's 21st sanctions package against Russia, which included 14 Chinese mainland and Hong Kong enterprises under the spurious charge of "supporting Moscow".

The 14 European entities — ranging from Germany's Rheinmetall to France's III-V LAB and Poland's Vigo Photonics — are not innocent bystanders. They are deeply embedded in Europe's military-industrial complex or supply cutting-edge dual-use technologies. Exporting controlled items to them without approval is now illegal.

The measure is precise, lawful under China's export control regulations, and calibrated to cause minimum collateral damage. This does not signal a trade war. It is a surgical warning. The underlying principle is simple: Any unilateral sanctions by the EU that harm Chinese entities' legitimate rights and interests will be met with an immediate, commensurate response.

When Brussels sanctioned 27 Chinese companies in April, Beijing retaliated within 24 hours by blacklisting seven EU defense contractors.

The deeper tragedy here is that the EU continues to conflate the Ukraine crisis with its broader economic relationship with China. The former is a European security emergency; the latter remains a massive engine of mutual prosperity. Last year, the goods trade between China and the EU hit about $860 billion, and European companies from Volkswagen to Airbus continue to regard the Chinese market as a source of growth and profit. For Brussels to frame Beijing as a scapegoat for its own internal challenges — whether inflation, industrial competitiveness or security — is both intellectually lazy and politically dangerous.

Europe's problems are not made in China. Its sluggish productivity, fragmented capital markets, aging workforce and the conflict in Ukraine are crises of its own making. Blaming Beijing for these ills will not revive European industry, nor will it make the EU any safer or more credible as a global power. Worse, it risks turning a manageable commercial relationship into a self-fulfilling spiral of mutual harming, from which neither side would emerge unscathed.

The first meeting of the China-EU trade and investment consultation mechanism, held in Brussels in late June, was constructive. The two sides agreed that increased market access measures and initiatives can contribute to the balancing of the trade relationship. They also discussed possible tariff or non-tariff initiatives to this effect, exchanged lists of market access issues and agreed to manage disputes through four dedicated working groups with a view to making progress on specific concerns.

Those mechanisms remain the rational channel for defusing tensions. But they will only work if Brussels shows a commitment to de-escalation. It cannot, on one hand, pledge to talk while on the other, weaponize its trade instruments to extract political concessions.

China, for its part, has shown restraint. Its countermeasures have been targeted, not sweeping. It has not retaliated against European consumer goods or agricultural products, as it easily could. It has kept the door open for dialogue. But restraint is not weakness, and the EU would be ill-advised not to mistake it as such.

In the end, the China-EU economic relationship is too large to fail and too complex to simplify. The two sides should respect each other's core interests and work together to strengthen cooperation.

For that to happen, Europe must stop baselessly treating China as an "enabler" of the Ukraine crisis or a "threat" to its economy and industry, and start treating the world's second-largest economy as what it is — a vital partner.

The ball is now in Brussels's court.