China cracks down on European telecoms networks, curbs use of Nokia and Ericsson kits

China has issued restrictions on the use of European telecom kit suppliers Nokia and Ericsson in its network systems amid President Xi Jinping’s efforts to lessen the country’s dependency on Western tech infrastructure.

Chinese state-backed buyers of IT equipment, such as telecom providers, utility companies, and firms in other key sectors, have started tightening oversight of foreign bids, two sources told the Financial Times.

Therefore, Sweden’s Ericsson and Finland’s Nokia have been submitted for “black box” national security reviews to be conducted by China’s Cyberspace Administration. The companies are largely kept in the dark about how their gears are being assessed.

Approval reviews by China’s influential technology regulator can take three months or more. While European companies may eventually get the green light, the drawn-out and unpredictable process often puts them behind local Chinese competitors, who are not subject to the same level of examination.

One of the sources said, “If China is doing this for national security reasons, the question is why Europe does not reciprocate by applying the same standard.”

As per analyst Stefan Pongratz at research provider Dell’Oro Group, Chinese curbs on Ericsson and Nokia have impacted their market shares, which fell to per cent last year from 12 per cent in 2020.

The EU Chamber of Commerce in China recently warned that localisation rules in the IT and telecom sectors pose an “existential threat” to European tech companies. In a recent member survey, nearly 75 per cent of respondents reported losing business as a result of these restrictions.

The move against European telecom networks comes as Xi pushes a self-strengthening drive to replace foreign technology in China. Last month, during his meeting with Russia’s Vladimir Putin and North Korea’s Kim Jong Un, Xi said China “does not fear power or coercion” as it “stands strongly on its own with self-reliance”.