EU Plans New Cybersecurity Law to Phase Out Chinese Tech

The EU is proposing new rules to phase out 'high-risk' technology vendors, mainly targeting Chinese companies in critical sectors like telecom and energy.
By Newsroom | Technology, European Union |

The European Union is moving to fundamentally alter its technology supply chains, proposing new regulations under a revised Cybersecurity Act aimed at phasing out vendors deemed "high-risk," a move widely seen as targeting Chinese companies. The proposed measures would make cybersecurity mandates obligatory, potentially excluding suppliers from sensitive areas such as telecommunications, connected vehicles, energy grids, and medical devices. This initiative comes amid growing concerns over the EU's reliance on both Chinese and American technology, with particular apprehension focused on potential vulnerabilities to coercion and cyber threats.

The legislative push involves a significant overhaul of existing digital rules, including a new Digital Networks Act and the updated Cybersecurity Act. These proposals seek to give telecom operators more control over airwave licenses while compelling member states to remove Chinese equipment from mobile networks. The potential financial implications of such a shift are substantial, with estimates suggesting that replacing Chinese telecommunications equipment alone could cost billions of euros. Furthermore, over 90 percent of solar panels used in the EU are manufactured in China, and local production could be up to 160 percent more expensive.

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Scrutiny Extends Beyond Telecoms

While the telecommunications sector, and specifically companies like Huawei, have been a focal point, the EU's proposed restrictions extend to a wider array of critical infrastructure. The scope includes equipment for border checkpoints, water supply systems, and health devices, alongside surveillance systems and components in sectors like renewable energy. The European Commission has reportedly already taken steps, such as banning EU funds from supporting energy projects that use Chinese-made inverters, due to their digital connectivity and potential cybersecurity risks.

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Recriminations and Countermeasures

Beijing has responded assertively to the EU's plans. China's government has decried the proposals as "blatant protectionism," with the Ministry of Foreign Affairs warning that Beijing will take "necessary measures" to defend its national technology firms. China views these actions as a violation of the EU's stated principles of fairness, non-discrimination, and proportionality, arguing they are not based on factual evidence or technical standards but rather on country of origin. Huawei, a key Chinese supplier, has stated its intention to safeguard its "legitimate interests."

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The EU, however, maintains that it has relied on "high-risk vendors from outside the European Union in strategic sectors for far too long." European Commission spokesperson Thomas Regnier indicated that the bloc intends to designate entire countries as potential "cybersecurity threats" under the act, which could lead to the exclusion of companies from numerous hi-tech industries and critical infrastructure sectors.

Internal EU Debates and Economic Considerations

The EU's initiative is not without internal friction. Reports suggest that some European capitals fear a "power grab" by Brussels, indicating potential roadblocks ahead as member states grapple with the implications. Telecom operators themselves have reportedly expressed reservations about the sweeping package.

Analysts note that the EU faces a complex balancing act, aiming to bolster its own technological sovereignty and enhance cybersecurity while navigating intricate economic relationships and avoiding a complete disruption of trade with China. Some concerns have also been raised that certain restrictions could border on industrial protectionism. The potential for reciprocal industrial policies from Beijing, such as tariffs or market access barriers, could further complicate broader economic cooperation between the EU and China. The overall cost of replacing Chinese technology, especially in areas like telecommunications and solar panel manufacturing, presents a significant economic challenge for the bloc.

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Frequently Asked Questions

Q: What is the EU planning to do with technology from China?
The EU is drafting a new cybersecurity law to phase out technology suppliers considered 'high-risk'. This mainly targets Chinese companies that supply equipment for important areas like phone networks, energy, and medical devices.
Q: Which sectors in the EU will be affected by the new cybersecurity law?
The proposed law affects many critical sectors. These include telecommunications, energy grids, connected vehicles, medical devices, border control systems, water supply, and renewable energy components.
Q: How much could it cost the EU to replace Chinese technology?
Replacing Chinese telecommunications equipment alone could cost billions of euros. Also, most solar panels used in the EU are made in China, and producing them locally could be much more expensive.
Q: How has China reacted to the EU's plans?
China has called the EU's proposals 'blatant protectionism' and warned that it will take 'necessary measures' to protect its technology firms. They believe the EU's actions are not based on facts but on the origin of the technology.
Q: Are all EU countries and companies happy with these new cybersecurity rules?
No, there are disagreements within the EU. Some countries worry about Brussels gaining too much power, and some telecom companies have expressed concerns about the broad changes.