How is this possible? The Dutch Minister for Economic Affairs is trying to prevent the Chinese owner of Nijmegen-based Nexperia from stripping the company of its assets, to which Beijing responds by restricting the export of chips from the company’s Chinese factories. And within a week, the automotive industry is already complaining that without Nexperia chips, their production lines will grind to a halt.
Joris Teer, affiliated with the European Union Institute for Security Studies, cannot fathom how little, at least part of, European industry has done in recent years to build greater resilience. ‘We had a chip shortage in the aftermath of the coronavirus crisis, we had the Russian gas blackmail, and we were constantly receiving signals from China that they could use critical raw materials as a weapon. And now this.’
Nexperia should never have been sold to a Chinese company eight years ago, says Teer in an interview with the FD. He points out that the logic of the globalised world used to be: just sell it off, and eventually even cheaper products will emerge for consumers. That world no longer exists. The idea that Europe will not be blackmailed by other blocs as long as everyone is economically interdependent has proved false. There are now geopolitical superpowers that see no problem in doing exactly that.
In this world of fierce competition between superpowers, Teer argues, it is all about the ‘pressure points’ that parties have against each other in the supply chains. ‘Nexperia’s chips may be somewhat more low-tech and their economic value lower than that of what various high-tech industries produce, but Nexperia’s true value is determined by the fact that they manufacture a strategically indispensable component.’ Europe has not yet fully realised this.
Have we been naive?
‘What Europe has realised too late is that you lose your security if you try to pursue free trade with a country that does not trade freely, but increasingly monopolises its own market, and then sends its own companies onto the world market where they can compete at prices well below market value. That you then lose control over the production you need for your hospitals, for your defence, for your telephone networks. ’
How dependent are we on China now?
‘The European Central Bank has calculated that 80% of major European industries are just three steps or fewer away from a Chinese producer of rare earth elements. So at least 80% are dependent on them. We’re talking about building blocks. If someone else can pull a building block out from under you, you have a major problem. That is why it is also of the utmost importance that building blocks for those essential supply chains are once again manufactured outside China. But also that you can make a credible threat to China: “If you no longer supply the critical raw materials or the Nexperia chips, then we will do A, B and C”.’
Do we in Europe even realise who we are dealing with?
‘China is building a self-sufficient fortress. With all sorts of products, such as medical equipment, they say: we only want to buy Chinese. Any company selling products in China must realise that President Xi Jinping’s goal is to replace you with a Chinese company. At the same time, they are working to deepen other countries’ industrial dependence on China. Xi says this explicitly. They are expanding their industrial capacity as quickly as possible, not only with the help of state aid, but also, for example, by investing wisely in energy, so that there is sufficient electricity available everywhere to produce as cheaply as possible. Coal, renewables, nuclear – everything goes. China already produces more than 30% of all manufactured goods worldwide. And according to the UN, that figure will rise to 45% by around 2030. So not only have we failed to reduce our dependencies, we are simply becoming much more dependent much faster.’
How does that manifest itself, for example?
‘This year we’ve seen that China can severely restrict the supply of critical raw materials. If you want to buy heavy rare earth elements now, you need a licence, and to get one you have to answer some very probing questions about your company. There are examples of drone manufacturers who had to send photos of the engines they use. That’s not particularly helpful given that China is maintaining ever-closer ties with Russia, and Russia is finding out via China how our engines are constructed. You also have to provide a long list of your customers, which enables China to map out the entire European-American defence industrial base. And look at the military build-up around Taiwan. Europe is trying to contribute to deterrence, but we now know that every time we do something the Chinese don’t like, fewer critical raw materials come our way.’
So, not much is coming of that ‘derisking’ that Brussels is always talking about?
‘We see that critical raw materials are already dominated by China and that China is gaining increasing control over chips and chemicals. That is very dangerous. Ultimately, we need them all to maintain our pacemakers and MRI technologies, as well as our wind turbines, weapons systems and energy networks. Raw materials, chips and chemicals form the skeleton, the nervous system and the connective tissue of the global economy. Take any one of those three away and nothing works anymore.’
Meanwhile, this summer we were mainly preoccupied with Donald Trump’s import tariffs, against which we had no countermeasure.
‘Europe has been exposed. Because a system based entirely on rules, with a market as free as possible, works in the old world, where the other major players do not try to squeeze you via value chains. We keep sending Ursula von der Leyen into a gunfight armed with a knife. If we let her negotiate with the Chinese or the Americans, they can issue a whole range of threats, whether it’s import tariffs or halting exports of essential building blocks.’
What should we do? Is there still anything we can do?
‘It is still possible to reduce our dependence on supply chains. Start by giving preference in your public tenders to strategic products (critical raw materials, chips, chemicals) from trusted countries, over those from China and other countries you do not trust. Take offshore wind farms, for example. A single wind turbine contains around 12,000 kilos of permanent magnets, and we are going to install thousands of them. You would expect to score more points in your tender if it states that you source magnets from Japan, or Korea, or Australia. That is not the case at present. Currently, it is simply a matter of sourcing the cheapest possible magnet. In this way, the government itself is making us more dependent on China rather than less so, because if you do not set conditions, you will always end up with the product that receives state aid.’
‘In addition, you must use defence funding to secure your supply chains, from mining through refining to the production of magnets and other components. In the short term, you could also decide to co-invest with the Japanese in the advanced projects they are already setting up all over the world. Furthermore, Europe should ramp up its own energy production as much as possible, so that we can see lower energy prices again.’
How much is actually happening already?
'So far, the EU has mainly drawn up memoranda and plans, set targets and devised strategic projects. When it comes to actually breaking ground, it falls far short of the mark. Everyone in Europe is pointing the finger at each other. You can say a lot about the Americans, but they are actually doing something.’
What lessons can we learn from the Nexperia case?
‘I fully support Minister Karremans’ decision. For politicians and senior civil servants, it is always easier to do nothing, because you won’t be held to account for that. That is what his predecessors and politicians in like-minded countries did after the end of the Cold War. It is because of them that the problem of extreme dependence on China has arisen. Taking action to put an end to a process that is highly detrimental to us – namely the constant de-industrialisation of Europe and the continued industrialisation of China – requires courage and is the right choice.’
This interview was originally published in Dutch in Het Financieele Dagblad on 20 December 2025 under the title "‘China kan de aanvoer van kritieke grondstoffen keihard afknijpen". It is reproduced here in English with the permission of Het Financieele Dagblad.