China Morning Missive
Once again, we have an event which takes place all with the intended purpose of containing China. And once again, we have a failed attempt.
Honestly, I’m somewhat surprised at the speed of the outcome. It was just a month back when the Dutch government announced that it had taken effective control over the Chinese owned technology group Nexperia. Yesterday, that decision was fully overturned.
The rationale for seizing the company was deemed “highly exceptional” and was done given “valid reasons to doubt sound management at Nexperia under the leadership of former CEO Zhang Xuezheng.” What does that even mean? Doesn’t matter. Everyone knew that the move was made in conjunction with the US government to apply pressure on China’s ambitions to build advanced chips.
I’m sure that, on paper, the move would have made considerable sense. On paper. What clearly wasn’t taken into account though were the second and third order effects of making such a move.
While Nexperia does have a sizable operational footprint within the EU, the actual end product (chips) is manufactured in Dongguan, China. In response, Chinese authorities placed a full export ban on all Nexperia chips.
Almost immediately, the global auto industry, the largest end customer for these chips, reacted. From BMW to Honda, the industry warned that production would go offline without access to the Nexperia chips.
Pressure then mounted and, in the end, the Dutch government was left with no other choice but to rescind its previous “highly exceptional” decision.
This is but a single example of the unforced errors being constantly made by the Americans and Europeans. Decisions are made all with the aim of containing China, but at each and every turn there’s never any forethought into how China can respond. There just continues to be a belief that unilateral action can be taken without running the risk of repercussions.
It has been years now that this way of thinking has permeated Western strategic thinking and, yet, there has been ample evidence that – when provoked – China doesn’t just retaliate, it does so in a way that is truly impactful.
What this example also demonstrates is the depth and breadth of China’s institutional bandwidth. Over the past 18 months there have been a host of geopolitical flare-ups all requiring the attention of China’s leadership. At every turn, there’s not only been an immediate response, but a very well-crafted response as well. Each situation was then adroitly navigated with outcomes heavily favoring the Chinese.
I’ll just once again make the following statement. It is well past time that the Americans and Europeans refrain from underestimating China’s capabilities. The leverage is now firmly in the hands of Beijing. There just isn’t anymore debate on this subject.
https://www.reuters.com/business/retail-consumer/dutch-government-suspends-state-intervention-chipmaker-nexperia-statement-2025-11-19/
