TACO, Nexperia, and what exactly does Europe want from China?

China Translated - Briefing #63

[This briefing is part of the The Great Divorce column of China Translated newsletter]

Last Friday, not long after China put up an American-style export control regime on critical metals, Donald Trump responded with a long and melodramatic Truth Social post that once again wiped out hundreds of billions of value in one stroke.

Trump accused China of “becoming very hostile” and of essentially making him lose face while he should be celebrated for brokering the peace in the Middle East after “three thousand years of bedlam and fighting”. Like a lover who felt betrayed, he said he would have no reason to meet Xi at the coming APEC Summit in Seoul.

Soon, in another post, he threatened that he would impose an additional 100% tariff. But ostensibly, this new tariff would only be effective after the APEC Summit. At a press briefing immediately after that post, Trump seemed to have already softened the stance. “I’m going to be there regardless, so I would assume we might have it.”

TACO again?

Almost at the same time, a report from CNN emerged, which included an interesting piece of detail:

…But there are also private frustrations at the White House after the US Commerce Department expanded the number of Chinese firms on an export controls backlist late last month that could have frustrated China, sources said.

This insider tip, and the fact that it exists at all in the public domain, seems to suggest that Trump has also started to realise that China was only retaliating, not escalating.

It also seemed to confirm the storyline that Chairman Rabbit, the well-connected Chinese influencer/commentator, wrote about last weekend. Chairman Rabbit speculated that a number of new US trade policies and sanctions in September angered the Chinese side, but Trump didn’t seem to realize the severity of it. One plausible reason was that Trump was busy with other matters lately, including the peace talks in the Middle East and a new federal government shutdown. The Chinese side decided that in order to put their frustrations on the table, they would have to retaliate, and only afterwards would Trump get the message.

Then, in the middle of the week, Scott Bessent raised eyebrows with his remarks describing Li Chenggang, China’s lead trade negotiator, as “unhinged” and “going rogue.” It’s not every day that high-stakes negotiations between major powers descend into personal attacks. Perhaps Bessent believed that by singling out one Chinese official, the U.S. could create a scapegoat—someone Beijing could later dismiss or sideline, giving both sides a pretext to restart talks? If so, it was a naïve miscalculation, while the tone and reaction from the Bessent gave off a strong impression that Washington might be running out of options.

And out of options they are. Finally, on Friday, Donald Trump said that he planned to meet with Chinese President Xi Jinping in South Korea in two weeks and suggested that imposing an additional 100% tariff on all Chinese goods appeared infeasible.

TACO again.

Almost simultaneously, another story was unfolding in Europe. On September 30, 2025, the Dutch government invoked a rarely-used emergency law—the Goods Availability Act—to take effective control of Nijmegen-headquartered chip manufacturer Nexperia, a subsidiary of China’s Wingtech Technology, which acquired Nexperia a few years ago for $3.6 billion.

The highly exceptional move was prompted by “serious governance shortcomings” at the company that the government stated posed a risk to Dutch and European economic security by threatening the continuity and safeguarding of crucial technological knowledge.

The details are still emerging, but from what I can gather, it does seem Nexperia under Wingtech was engaged in some dodgy corporate governance practices. But let’s be honest here. No amount of dodginess warrants a drastic takeover by government authorities. Even the Chinese government won’t do this kind of thing today. If the Chinese government seized a foreign business simply because of suspicion of corporate mismanagement, just imagine the uproar!

From stories as reported by the Dutch media, as well as from the Chinese side, we start to see a common thread: The Dutch government had long wanted Wingtech to cede substantial control of Nexperia, in order to protect the Netherlands’ domestic semiconductor base from being trapped in the U.S.–China power struggle.

The sequence of events is crucial here. Among the many new U.S. trade restrictions on China announced in September, which triggered Beijing’s recent retaliation, the most notable one was the so-called “50% rule.” Under this rule, Nexperia, as a subsidiary controlled by Wingtech, would automatically fall under U.S. sanctions because Wingtech itself was listed on US BIS’ Entity List. On the very next day after the 50% rule was announced, the Dutch government moved to seize control of the company. The motive—to shield itself from the crossfire of the U.S.–China trade dispute—could not have been clearer, and when forced to choose between the U.S. and China, the Dutch chose the U.S., while sacrificing Chinese interests in the process.

Wingtech’s main sin is that it’s Chinese. What the Nexperia case has demonstrated is that the fact of being Chinese itself has become a risk factor in doing business in Europe. As a Chinese businessperson myself, this feels both troubling and disheartening.

This raises a fundamental question for the Dutch government—and for Europe as a whole: what exactly do you want from China?

Europe needs industrial revival, infrastructure renewal, and investment. To achieve these goals, Europe needs foreign capital and know-how—and few countries can offer both as abundantly as China can. Yet the Nexperia case suggests that Europe may not actually welcome Chinese investment at all. If that’s true, who will fill the gap? Does Europe believe Donald Trump—or any U.S. administration—would commit to a “Marshall Plan 2.0” to make Europe great again?

And if Chinese investment is not welcomed, European officials should shut their mouths next time about accusing China of “over-capacity” and “trade imbalances”. After all, what’s a better way to resolve these issues than allowing more Chinese companies to invest in Europe?

If Europe is still open to Chinese investments, then some major clarification is needed to restore confidence.

It is worth noting that Nexperia was not commonly considered a core strategic asset. When it was sold to Chinese investors, both the seller and the regulator knew it was a low-end business of NXP, and they got a great deal from Wingtech. After all, Nexperia is no ASML or Airbus, the kind of truly core European strategic assets that nobody would imagine the Chinese investors would ever be allowed to buy.

So where is the line? If one day CATL or BYD are added to the US’s whichever restriction lists (not entirely unlikely), do the massive plants that they have built or will be building also face the risk of seizure? Unless that line is clarified, Chinese investors—from industrial giants like CATL, down to small and medium-sized businesses—will be extremely cautious about investing in Europe. And that would be Europe’s loss.