In the escalating tech rivalry between Europe and China, the narrative often focuses on Europe's reliance on Chinese manufacturing and rare earths. Yet a closer look reveals that Beijing's own push for technological sovereignty — enshrined in its 15th Five-Year Plan — still leaves it dependent on European capabilities in several strategic industries. From the Dutch company ASML's near-monopoly on advanced chip-making machines to French and German aerospace suppliers, European firms remain indispensable to China's industrial ambitions.
However, experts caution that this dependence does not automatically translate into leverage for Brussels. China's stranglehold on rare earth elements, essential for Europe's green transition and defence, remains a far more potent weapon. As Tobias Gehrke of the European Council on Foreign Relations put it, "China really has a choke point when it comes to minerals, but we don't have an equivalent choke point."
Semiconductors: ASML's Strategic Grip
In the semiconductor supply chain, the EU's crown jewel is ASML, the Dutch lithography giant with a market capitalisation exceeding €630 billion in 2026. It holds a near-monopoly on extreme ultraviolet (EUV) lithography machines, which are essential for producing the most advanced chips used in artificial intelligence and electric vehicles. The United States and the Netherlands have already restricted sales of EUV machines to China, but Beijing can still purchase less advanced deep ultraviolet (DUV) models, a segment where ASML commands nearly 90% of the global market. In 2024, up to 70% of ASML's DUV shipments went to China.
China is racing to catch up, now requiring that 50% of equipment in new chip production capacity be sourced domestically. Sam Goodman, an expert at the Martens Centre, notes that Beijing aims to produce its own chips without ASML machines by 2028, but "they're still going to be dependent on ASML to learn." Maintenance and repair of existing ASML equipment in China also generate significant revenue for the Dutch firm. Gehrke warns that any EU export restrictions, especially on servicing, could cause "potentially large" economic damage to China, but also carry "great spill-over risks" given ASML's exposure.
Aerospace: European Suppliers Ground China's Ambitions
China's Comac C919 narrow-body airliner, designed to rival Boeing and Airbus, remains heavily reliant on European components. Goodman lists France's Safran (engines), Germany's Liebherr Aerospace (cabin pressure systems), and Italy's Avio Aero (engine casings) as key suppliers. "Without the participation of these companies, China wouldn't have a civil aviation programme," he says. Yet weaponising this dependence could backfire: European suppliers profit handsomely from Chinese orders. Goodman argues the alternative is to "accept basically that China learn all our technology, create rivals and then destroy our market share."
A quiet battle is unfolding over certification. China seeks European Union Aviation Safety Agency (EASA) approval for the C919 to operate in Europe, a process that Gehrke says "is a leverage for Europe which could politicise the process." Beijing is already retaliating by slowing certification of new Airbus aircraft in China, where Airbus holds roughly 55% of the market with over 2,200 planes in service.
Pharmaceuticals and Biotechnology: Europe's Patent Lead
Europe still dominates pharmaceutical patents. In 2024, companies in Italy, Germany, and France alone held twice as many pharmaceutical patents as China. European firms like Germany's Merck, France's Sanofi, and Britain's GSK control 51% of the global vaccine market. However, China's R&D investment grew 16.2% annually between 2020 and 2024 — double Europe's pace — and now accounts for over a third of new molecules in global pharmaceutical research. Some EU companies, including Bayer and Sanofi, have formed joint ventures to tap into China's research spending and lower manufacturing costs.
These interdependencies create a complex picture. While Europe holds critical cards in semiconductors, aerospace, and pharma, China's rare earth monopoly and rapid technological catch-up limit Brussels' room for manoeuvre. As the EU debates its trade strategy — including tools to address the record trade deficit with China — the question of leverage remains central. For now, the relationship is one of mutual dependence, with both sides wary of escalation.
