CHOICE Newsletter: How Brussels Manages Its Beijing Dependence

Dear reader,

Europe has entered 2026 with a sharper sense of where its vulnerabilities actually lie: not in abstract “dependencies,” but in very specific chokepoints. Across Brussels and member-state capitals, the debate is shifting from aspirations to governance: who controls the hardware, the firmware, the standards, the permits, the financing – and ultimately the pace.

I’m also excited to share a new opportunity for early career professionals – registration is now open for the Future CHOICE Summer School on Interlinked Instability: Europe’s Indo-Pacific Dilemma. Come to the Czech Republic to spend five days engaging with world-class experts and like-minded peers. The deadline for applications is March 8.

By Ivana Karásková, CHOICE Founder and Team Lead (based in Prague)

CHOICE Quick Takes

Europe’s Rare-Earth Dilemma Continues

European climate and industrial goals hinge on materials like neodymium and dysprosium, yet the EU has virtually no domestic rare-earth mining or processing capacity. China dominates globally, accounting for approximately 95 percent of rare-earth oxide production, and supplies around 70 percent of Europe’s rare-earth imports. As a result, Europe’s auto and tech sectors are highly exposed. When China tightened export-licensing requirements in April 2025, rare-earth shipments fell sharply, and several European carmakers were forced to halt production. Moreover, China’s control over 85 percent of rare-earth-element (REE) processing and more than 90 percent of high-performance magnet production magnifies its leverage.

In 2023, the EU passed the Critical Raw Materials Act, setting ambitious 2030 targets. But permitting remains slow and funding modest. The 2025 ReSourceEU Action Plan aims to mobilize €3 billion, yet tools like joint purchasing and diversification mandates remain optional. For example, Romania’s planned rare-earth refinery, designated a Strategic Project under the EU’s Critical Raw Materials Act, has stalled amid permitting delays and unresolved challenges related to radioactive by-products such as thorium and uranium. In contrast, Brazil’s Serra Verde project, backed by a $465 million loan from the US Development Finance Corporation, successfully renegotiated its long-term offtake agreements to redirect supply away from Chinese buyers and open access to Western markets.

The message is clear: Europe’s policy ambition outpaces implementation. Without procurement mandates, price supports, and faster permitting, Europe’s alternative supply chains won’t scale in time. In 2026, the contest is not just with Beijing (or the US) – it’s within Brussels.

The Energy Transition Meets Security Reality

This year, Europe’s power grids will move from being a neglected security issue to a contested policy battlefield. After years of rapid deployment of Chinese-manufactured solar inverters and battery energy storage systems, the assumption that grid digitalization is a purely technical matter is collapsing. Legislators and security authorities are now confronting the reality that these devices are system-relevant, remotely manageable, and often governed by firmware and cloud platforms outside of European control.
Several legislative and regulatory measures are already in the pipeline, and debates over restricting or conditioning Chinese solar inverter and storage technologies are likely to intensify. Frictions are to be expected as security and energy objectives increasingly collide. Grid operators and developers worry about cost and deployment speed, while security authorities increasingly argue that resilience cannot be bolted on after deployment and warn that concentrated control over inverter and battery fleets creates structural exposure that cannot be ignored any longer. 
These tensions are now driving a shift in policy assumptions. Solar and battery systems are on track to be governed less as ordinary consumer technologies and more as a strategic infrastructure fundamental to power grid stability and societal resilience. The key battles this year will therefore be over governance, not decarbonization.

Europe’s Semiconductors Crossroads

With Washington’s tech war policy process in disarray, Beijing and Berlin are the capitals to watch for substantive moves on the global semiconductor supply chain. Xi’s quest for Chinese autonomy has begun producing results. The Netherlands’ EU-wide Semicon Coalition and Nexperia court case may attract attention, but much of the European response to Xi depends on German choices.

China’s export restrictions on Nexperia hightened the need to address both Beijing’s chokehold on legacy chips as well as the limited exchange of expertise and information among EU members – and even between the Dutch ministries. How much room Beijing’s semiconductor industry indigenization drive leaves for foreign players will become clearer with its final decision on the import of Nvidia’s advanced H200 chips. Meanwhile, Europe will carefully watch the Huawei-led effort to replace ASML’s uniquely advanced lithography machines.

Germany has lacked control so far. Its industry was caught unprepared for the Nexperia cut-off. German officials and industry lobbyists expressed private chagrin at being left out of the Dutch export-control discussions – despite ASML’s reliance on German suppliers. Yet both cases show Berlin can be a key player, beyond its powerful vote in Brussels. Now Germany is under an even brighter spotlight as Huawei’s replacement effort searches for components, and Brussels may be compelled to regulate the second-hand equipment market and talent flows as well.

CHOICE in Brussels

Quiet Retaliation Plans

In Brussels, discussions about energy grids, rare earths, and semiconductors, so by proxy also about China (and the US), increasingly revolve around practical questions – what happens when economic and geopolitical pressure further escalates, and how the EU could respond without losing neither its liberal image nor the control of the situation. 

A reference point for this could be the issue of telecom security, first tackled in the 2020 5G Cybersecurity Toolbox. The EU’s officially country- and company-agnostic approach to high-risk vendors (such as China’s Huawei and ZTE) present in this document could be seen as an example of Brussels’ original concept of escalation preparedness and potential retaliation. Brussels tried to rely on risk assessments, procurement rules, and guidance, while leaving room for national implementation. Based on recent data, it could be concluded that this approach has largely failed as the majority of member states did not wish to comply with Brussels’ guidelines. Nonetheless, it did allow most EU countries to put rules in place that restrict certain providers. Over time, this approach may thus help reduce exposure in critical parts of networks while avoiding abrupt political confrontations. The EU tries to speed up the process and is currently reviewing the Commission’s proposal for a revised Cybersecurity Act. It is intended to be the EU’s more decisive response to changing political realities, but inevitably, its enforcement will not begin soon and will still ultimately depend on the will of the member states. All these experiences now feed into discussions beyond telecoms, as concerns grow around critical raw materials and semiconductors and EU officials explore how similar tools could be applied in these realms.

The potential need for retaliation is part of these discussions, but not through immediate tariff escalation or any similar explicit actions. Blunt tariff responses could prove costly (and politically difficult), particularly in sectors where Europe remains dependent on foreign, especially Chinese and American inputs. In practical terms, this has translated into discussions about who moves first (the Commission or national governments), under what legal basis, and how far measures can go so as not to divide the EU even more. Within this context, the Anti-Coercion Instrument (ACI) became the main reference point, albeit for now discussed mainly vis-à-vis the US. This “trade bazooka” has never been used before and could be understood as a coordination mechanism, designed to centralize responses and close off the EU’s single market if economic pressure becomes too high.

High-level political signalling also shapes the debate. Stéphane Séjourné, the Commission’s Executive Vice-President for Industry, has repeatedly called for a tougher approach toward China, including broader trade measures. The prevailing mood, however, remains cautious – proposals must stand on legal grounds and command sufficient support among member states. This caution is especially visible around the concept of “in-kind tariffs,” the rarely mentioned contingency option tied to rare earths and other critical materials. The idea would be to require certain Chinese exporters to, along with the exported products, supply raw materials directly into EU stockpiles as a condition for access to the EU market. If the ACI is Brussels’ “trade bazooka,” then in-kind tariffs would be the EU’s nuclear option, which is why they are not officially debated or even commented on. For Brussels, to maintain stability and its liberal image, the emphasis remains on buying time, strengthening preparedness, and keeping escalation manageable – while quietly expanding its toolbox.

By Konrad Szatters, CHOICE Analyst (based in Brussels)

WiCH Highlights

Francesca Ghiretti, WiCH Co-Chair for Italy, co-authored an article on the threat posed by China’s connected energy systems. Read it here! 

Ágnes Szunomár, WiCH Co-Chair for Hungary, spoke on the Geoeconomic Competition podcast about Chinese invesments in European BEV. Listen here!

Agatha Kratz, WiCH Co-Chair for France, wrote a commentary on the rising cost of de-risking from China for Europe. Read it here!

CHOICE News

 Emma Belmonte and Paulína Ovečková published an article in The Diplomat on limits of China’s security ties in Latin America, in the light of US action in Venezuela (read it here).

 Ivana Karásková commented on the Czech foreign policy shift towards China for the Czech News Agency (read it here) and on the recently apprehended Chinese spy in the Czech Republic for Deník N and Radiožurnál (read it here and listen here).

 Paulína Ovečková  wrote an article in Hospodářské Noviny on what trends to watch in China’s economy, politics and tech in 2026 (read it here).

 We’re on Bluesky, LinkedIn, X, and Instagram! Stay updated with our latest articles, insights, and news by following our accounts – don’t miss out on valuable content and updates.

This is the web version of our newsletter. If you’d like to receive the CHOICE newsletter in advance, straight to your inbox, sign up here: