- European countries are currently in the process of defining what policy measures are necessary to protect the EU’s economic security. Although the Commission is in the driving seat of this process, member states have also tightened scrutiny on economic interactions with China.
- The German government -although much criticized for dragging its feet on tougher de-risking measures – has also quietly increased scrutiny of German dual-use exports.
- Based on data published by the German Economy Ministry, export licensing for dual-use goods to China has become more restrictive compared to 2022. The value of approved dual-use goods to China has plummeted 29 percent in the first three quarters of 2023 compared with 2022. The total number of approved exports has also decreased by 21 percent. The approvals declined faster than the total export value(-9 percent) in the same period.
- While a stricter scrutiny comes amid a tense geopolitical environment, it has also led to more uncertainty and costs for companies exporting to China. Anecdotally, approval times for companies have increased from a few days to several months.
- In December 2023, the German Foreign Ministry issued further measures to make the approval process for defense and dual-use goods more efficient. Approval for selected EU, NATO members and other partners will be accelerated by so-called General Approvals under which export cases have only to be reported, rather than requiring individual approvals as in the past. This might also free up resources for faster approvals of exports to China. However, this remains to be seen.
Sinolytics is a European research-based consultancy entirely focused on China. It advises European companies on their strategic orientation and specific business activities in the People’s Republic.