EU-China: Chinese Export Controls Take on a Growing Role in Tensions with Brussels

At the end of July, China’s Ministry of Commerce (MOFCOM) added 14 European Union entities to the Restricted Namelist, prohibiting Chinese exporters from supplying them with dual-use goods and also preventing foreign entities from transferring such China-origin goods to the designated entities. The measure, which took immediate effect and may be waived only with prior authorization from MOFCOM, was adopted in response to the EU’s 21st package of sanctions against Russia.

The decision reflects Brussels’ perception of the growing involvement of Chinese entities in the supply chains underpinning Russia’s industrial capacity. Indeed, under its 21st sanctions package, the EU added 51 entities to restrictions on the export of dual-use goods and technologies destined for Russia’s military-industrial complex, including companies located in third countries. Among them are 14 entities based in mainland China and Hong Kong, some of which, according to the Council of the EU, have been involved in circumventing controls on microelectronics, CNC machine tools and semiconductor manufacturing equipment. This growing Sino-Russian interdependence in industrial sectors considered sensitive has been highlighted by several analyses, according to which Chinese exports to Russia of the 50 products included in the Common High Priority List exceeded 4 billion dollars in both 2024 and 2025.

The scope of the measure, however, extends beyond the Russia dossier alone. The 14 affected European entities operate across heterogeneous yet strategic sectors: alongside Rheinmetall, they include Italy’s Lafert in electric motors, VIGO Photonics in photonics, III-V LAB in semiconductors, Tatra Trucks, IHC Merwede and Ekspla, as well as other operators active in advanced materials, chemicals and remotely piloted systems. The composition of the list illustrates how Beijing can selectively apply its export control regime to dual-use and high-tech segments of European value chains. Nor is this an isolated precedent, as seven European entities had already been added to the Restricted Namelist in April 2026 for activities connected to military supplies to Taiwan.

At the empirical level, the immediate economic impact depends on the degree of exposure of individual companies to controlled inputs of Chinese origin. For instance, VIGO Photonics has pointed to potential effects on its semiconductor materials segment, in which approximately half of revenues depended on InP substrates previously sourced from China; in 2025, the segment accounted for 8.8% of the company’s total revenues. At the same time, Rheinmetall’s exposure appears more limited, as the company has played down the expected impact of the restrictions in light of its diversified sourcing and available inventory levels, which are considered sufficient to contain the consequences for production and continuity of supply.

The measure is particularly significant considering the high concentration of certain strategic supply chains in the People’s Republic of China. As early as April 2025, China’s use of export control measures had led to a sharp contraction in trade flows and, in some cases, temporary production disruptions in the automotive sector. While this does not imply that such supply chains are directly affected to the same extent by the measure adopted on 24 July, this precedent shows how a high concentration of supply sources can amplify the effects of future selective restrictions. The expanding use of Chinese export controls against European entities therefore increases the regulatory risk associated with dependence on strategic inputs of Chinese origin and reinforces the need to diversify supply chains in the most highly concentrated segments. Such diversification, however, appears difficult to achieve in the short to medium term, while ministerial-level discussions between Beijing and the EU, which are expected to conclude in October, represent an important step towards managing and potentially reducing trade-related risks.