The European Union’s push to bar Chinese suppliers from its critical infrastructure under a proposed new Cybersecurity Act would cost the bloc a jaw-dropping €367.8 billion (US$431.4 billion) over the next five years, a new study has warned.
The law’s vast price tag comes from the need to rip out and replace huge amounts of Chinese hardware – a task that alone could cost €146.2 billion – with other losses stemming from resource reallocation, service disruptions, employment adjustments and legal fees, according to the report by the China Chamber of Commerce to the EU (CCCEU) and KPMG.
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The revised Cybersecurity Act – proposed by the European Commission in January – would restrict the use of Chinese equipment across 18 sectors of the economy, ranging from energy, transport and healthcare to banking, digital networks and the space industry.
“Given the highly interconnected nature of Europe’s digital value chains … the resulting cost pressures would be borne across the economy, with small and medium-sized enterprises and end users likely to experience higher sensitivity,” said Liu Jiandong, chairman of the CCCEU, in the report released on Wednesday.
Annual losses from the policy are projected to reach €39.1 billion in 2026 and peak at €93 billion in 2028, before plateauing at €91 billion for 2029 and €89.6 billion for 2030, according to the study.
Beyond direct hardware costs, the report predicts €102.1 billion in social losses, with €88.3 billion of that driven by delayed digitalisation and green transition costs. The social losses also include €3.3 billion in unemployment assistance – a figure the report said carried significant policy weight despite its smaller size relative to other categories.
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All 18 sectors covered by the NIS2 Directive – an earlier EU cybersecurity policy that paved the way for the new law – stand to incur major losses under the proposed measures, according to the report. Logistics and manufacturing would be hit hardest at €114.6 billion, followed by energy at €79.9 billion and telecommunications at €57.4 billion.