EU TELECOMS SQUEEZED BY CHINA TECH POLICY

The government of China is using a new national security review system to increase restrictions on European telecommunications suppliers. This policy directly affects firms like Ericsson and Nokia and is part of a broader strategic push for self-reliance within the China tech sector. The development is indicative of a global trend toward technological decoupling, where states prioritise domestic supply chains for critical infrastructure. This systematic approach contrasts with the more fragmented response to similar security concerns regarding Chinese suppliers in Europe.

New Security Reviews And Market Impact

State-backed buyers in China have begun subjecting contracts from Sweden's Ericsson and Finland's Nokia to opaque "black box" national security reviews by the Cyberspace Administration of China (hereinafter: CAC). The companies are not informed of the assessment criteria for these reviews, which can last over three months and create significant disadvantages compared to Chinese rivals. This process was deepened by a 2022 cybersecurity law update affecting "critical information infrastructure". These restrictions have directly impacted the European firms' market position. The combined market share for Ericsson and Nokia in China's mobile networks fell from 12 per cent in 2020 to around 4 per cent in 2023. Both companies have reported corresponding revenue declines from China.

The Contrasting European Approach

The situation in China is different from the approach in Europe regarding Chinese vendors like Huawei and ZTE. Despite security warnings from the European Commission, only 10 of the European Union’s 27 member states had implemented restrictions on high-risk suppliers by June 2025. This reluctance has been attributed to the lower cost of Chinese equipment and a desire to avoid economic conflict with Beijing. As a result, Huawei and ZTE have retained a 30 to 35 per cent share of the European mobile infrastructure market, a minor decrease from 2020. In Germany, for example, 59 per cent of installed 5G equipment is from Chinese groups.

Outlook

The trajectory for European firms within China's market is one of continued, managed decline, driven by policies favouring the domestic China tech industry. The institutionalised and opaque security reviews function as a significant non-tariff barrier, directly serving China's strategic goal of technological self-reliance and making a policy reversal unlikely. The China-Europe technology relationship will likely follow one of two paths. The first is a continuation of the current asymmetry, where China restricts European vendors while Chinese firms maintain significant market access in a fragmented Europe. Within the context of the economic developments of the past 10 years, this scenario is very likely; also in the light of the global shift of power. The second is an acceleration of reciprocity from Europe. If the market position of European firms in China erodes further, it could increase political pressure within the European Union to adopt a more unified and stringent policy, accelerating a coordinated phase-out of Chinese equipment. The outcome will depend on whether the economic costs of inaction for Europe's tech sector are judged to outweigh the perceived risks of a broader trade conflict.