latest news

The EU's proposed Cybersecurity Act, under which it reportedly aims to phase out components and equipment from so-called high-risk suppliers such as Huawei in critical sectors, could cost the bloc 30 billion euros ($34.1 billion) to 40 billion euros in direct "rip and replace" expenses, along with an additional 8.5 billion euros from 2027 to 2030 due to higher equipment prices from reduced competition, a report released by a leading industry group showed on Wednesday (EU time). 

The added cost could be up to four times the EU's official estimate in January, which was put at 3.4 billion to 4.3 billion euros per year for three years, or approximately 10 billion to 13 billion euros in total.

Analysts said that the hefty cost offers fresh evidence that certain EU politicians' de-risking approach to China - under the guise of so-called national security - not only conflicts with the actual needs of local businesses and the market, but would ultimately backfire as it is proven to weaken the bloc's economic openness and industrial competitiveness. 

According to a report by the GSMA, a global trade body representing the telecom industry, the mandatory exclusion of designated third-country vendors from EU telecoms networks under the EU Cybersecurity Act would "impose substantial direct costs on operators, reduce competition in network equipment markets and likely slow the development of Europe's digital infrastructure."

The GSMA priced the removal of so-called high-risk vendors from mobile networks at 16 billion to 22 billion euros, from fixed networks at 5 billion euros and from transport networks at 9 billion to 12 billion euros. These segments bring the total direct replacement cost to 30 billion to 40 billion euros.  

The report also highlighted the risks of less competition among manufacturers of telecom equipment after the removal, which could lead to higher equipment prices. 

According to its forecast, the estimated equipment price rises imply an additional cost of about 8.5 billion euros over the 2027-2030 period, concentrated in mobile networks. For the 2027-2035 horizon, cumulative additional investment costs could reach approximately 24 billion euros.

The new Cybersecurity Act was proposed by the European Commission in January. According to media reports, the Council of EU flagged a series of concerns among the member states in May, including how to identify the so-called high-risk suppliers, as well as the scope and likely impact of the proposed measures.

The release of the GSMA's report comes at a time when the EU has been ramping up politically driven curbs on trade and economic activities with China, ranging from the proposed Industrial Accelerator Act that discriminates against Chinese investments and new fast fashion legislation that targets Chinese cross-border platforms, to growing hype over the "undervalued yuan," a claim that serves as a scapegoat for the continent's declining industrial competitiveness. 

This approach has not only drawn strong opposition from the Chinese side, but also faced rising skepticism within the bloc itself, with EU members divided on the issue. 

"The hefty cost exposed a critical issue: while certain EU politicians remain obsessed with a highly politicized 'de-risking' approach to score short-term political points, to what extent are local businesses and markets willing to bear the costs of the EU's discriminatory industrial and trade policies?" Cui Hongjian, a professor at the Academy of Regional and Global Governance at Beijing Foreign Studies University, told the Global Times on Thursday. 

He stressed that as the core contradictions going forward will center on diverging interests and the allocation of responsibilities, this approach will continue to generate new disputes and tensions within the bloc.

Xiang Ligang, director-general of the Zhongguancun Modern Information Consumer Application Industry Technology Alliance, warned that stepped-up restrictions on Chinese companies would push the EU market toward greater conservatism and being closed off, locking it into a path dependency of trade protectionism. 

It would also dampen the prospect of deepened China-EU cooperation, which should otherwise be highly promising given the strong complementarity between the two economies, Xiang told the Global Times on Thursday.

"If a large volume of made-in-China goods with outstanding cost performance is forced out of the market, this will directly drive up the living costs of European consumers, while also increasing the production and operating costs of European enterprises, ultimately weakening the EU's own economic openness and industrial competitiveness," Cui added.

China's Ministry of Commerce (MOFCOM) struck a harsh tone on the EU's discriminatory measures, vowing to take countermeasures to protect Chinese companies if necessary.

The ministry on Wednesday expressed serious concern about France's newly passed "anti-fast fashion" law, which imposed discriminatory restrictions on Chinese cross-border e-commerce platforms including Shein, Temu, and AliExpress, and vowed to take necessary measures to hit back if the legitimate rights and interests of Chinese enterprises are infringed.

In April, a MOFCOM spokesperson vowed that if Chinese enterprises faced discriminatory treatment as a result of the EU's revision of the EU Cybersecurity Act, China would take countermeasures in accordance with the Foreign Trade Law and regulations on industrial and supply chain security to safeguard the legitimate rights and interests of its enterprises.