€367.8 Billion Question: Guardrails or Blockade? [Promoted Content]

For decades, despite the ebb and flow of political relations, the China-EU economic relationship has been a quiet success story. Built on the simple premise that we can seek common ground while respecting differences, this partnership has moved far beyond the exchange of goods – into investment, technology, and integrated supply chains.

Chinese enterprises have contributed to that evolution—not only as market participants, but also as long-term co-builders of Europe’s green and digital future, helping to upgrade infrastructure, drive innovation, and support the bloc’s twin transitions. From renewable energy projects in Spain to digital infrastructure in Germany, their technology and investment are already firmly rooted across the continent.

That is why a looming policy shift in Brussels should give us all pause.

The proposed revision of the EU Cybersecurity Act (CSA2) has a noble goal: making the Single Market more secure. But the devil is in the details.

The proposed CSA2 is expected to empower the European Commission to designate third countries that pose “cybersecurity concerns”—and then classify any supplier from, or controlled by, those countries as “high-risk suppliers.”

While strengthening cybersecurity across the Single Market is both legitimate and necessary, CSA2’s subjective non-technical risk assessments and mandatory, blanket, and time-bound exclusion measures risk introducing economic restriction under the name of security.

The forced exclusion of established suppliers would have broad economic consequences for the EU member states, including higher costs, reduced vendor diversity, distorted market competition, delayed digital and green transitions, and weakened innovation capacity and global competitiveness.

The potential price tag is enormous. A joint assessment by the CCCEU and KPMG, released on May 6, 2026, in Brussels, estimates that these mandatory exclusion measures could cost the EU a staggering €367.8 billion over the next five years.

That’s not monopoly money—that’s real economic loss: roughly €150 billion in direct replacement, €80 billion in supply chain disruption, €100 billion in wider social and transition effects, and nearly €40 billion in legal and compliance burdens.

The question, then, is: are these proposed “guardrails” actually making the EU safer, or are they inadvertently building a blockade?

The uncomfortable truth is that forced exclusion isn’t just expensive—it could be structurally self-defeating.

In telecom, Chinese suppliers have helped expand Europe’s mobile broadband infrastructure at lower cost while operating within existing regulatory frameworks. The proposed CSA2’s 36-month blanket replacement mandate would force operators to rip out existing equipment, diverting engineering resources from 6G and AI. There is no standing alternative supply chain ready to absorb this shock. Connect Europe has warned that such measures could affect deployment continuity and investment planning.

In energy, Chinese manufacturing scale has driven down solar and storage costs. Over the past five years, Europe has accounted for 10–17% of new solar installations, underpinned by deeply interconnected supply chains that cannot be replicated overnight. Forced exclusion does not automatically translate into immediate replacement—it risks slowing deployment at a critical moment in the energy transition.

Under the CSA2, the energy and telecom sectors alone would bear nearly 40% of total losses—€79.9 billion and €57.4 billion, respectively. That’s a “compliance premium” that will squeeze corporate innovation budgets and ultimately flow downstream to consumers and taxpayers through higher prices.

Worse, a uniform, Brussels-mandated replacement regime ignores the deep asymmetries between member states. Germany, France, and Italy would face enormous pressure. But smaller, more fiscally fragile economies—such as Greece, Portugal, or the Baltic states—could fall into a trap of “slowed digital development,” left further behind, weakening the Single Market from within.

Beyond these sectors, the EU’s economy is deeply intertwined with China’s across trade, investment, and innovation.

In 2025, two-way trade reached €759 billion, with a large share consisting of machinery and electrical equipment—products that feed into European manufacturing and energy systems, many of which fall within sectors affected by CSA2-related restrictions.

Two-way investment stock exceeded $280 billion, embedded in local factories and jobs across the continent, creating deep economic linkages that could be affected by CSA2-related restrictions on key sectors and suppliers.

On innovation, Chinese applicants filed a record 22,031 European patents in 2025—nearly 11% of all EPO filings—with Huawei ranked second and CATL tenth, reflecting sustained participation in Europe’s innovation ecosystem that could also be impacted by measures limiting access to standard-setting and technology cooperation.

The CSA2’s approach—equating trustworthiness with country of origin in the absence of objective, technical evidence—is not just economically costly. It may also raise questions regarding the principles of equality and non-discrimination enshrined in Articles 20 and 21 of the EU Charter of Fundamental Rights, as well as consistency with WTO rules. Screening based on geopolitical classification rather than empirical risk is a blunt instrument that sets a precedent for other sectors.

So here is the core argument: legitimate cybersecurity concerns do not justify self-defeating economic decoupling.

The China Chamber of Commerce to the EU (CCCEU) therefore calls on EU institutions to reconsider the advancement of mandatory exclusion measures in their current form. What is needed is a regulatory approach that is technologically neutral, evidence-based, and consistent with global trade rules. Mutual trust—not blanket suspicion—must remain the foundation for long-term stability.

China and the EU are two major economies with a shared responsibility to uphold multilateralism and open cooperation, especially as protectionist pressures rise globally.

Guardrails should strengthen security. If they become barriers to cooperation, Europe risks discovering that some of the most difficult obstacles are those it has created itself—and that their costs may prove harder to reverse than expected.