The Scanner at the Gate: Europe’s China Policy Litmus Test

At Europe’s ports, airports, customs posts, and border crossings, security scanners decide what gets inspected before people and goods move on. One of the companies supplying those machines is Nuctech, a major Chinese producer of threat-detection systems used to screen luggage, cargo, vehicles, and people. Now the European Commission is asking whether Nuctech’s rise in Europe was helped by Chinese state support. Under the EU’s Foreign Subsidies Regulation, Brussels is examining whether grants, tax advantages, preferential financing, technology-development support, or liquidity support enabled Nuctech to offer lower prices, win more tenders, weaken competitors, and expand its position in Europe’s security-screening markets. Instead of a good faith response to an everyday business inquiry, China’s Ministry of Justice declared that the EC’s investigation is an “improper exercise of extraterritorial jurisdiction.” It ordered organizations and individuals not to assist in its execution. Beijing’s attitude signals what Europe signs up for by doing business with China. 

That reaction should get Europe’s attention because it exposes the economic logic at stake. A company does not need to dominate the markets overnight. It can enter Europe’s open procurement system with prices rivals struggle to match, win contracts, and gradually make the next tender harder for competitors to contest. 

Nuctech operates in overlapping security-screening markets alongside suppliers from market economies, including European companies such as Smiths Detection, Rohde & Schwarz, CEIA, and U.S. firms such as Rapiscan Systems, Leidos, Garrett Metal Detectors, and Astrophysics, as well as Canada’s VOTI Detection and India’s Vehant Technologies. These companies do not all sell identical products: some specialize in cargo and vehicle inspection, while others focus on airport baggage screening, people screening, metal detection, or critical-infrastructure security. But that is precisely the point. Nuctech’s alleged state-backed advantage would not affect just one product line. It could distort a wider ecosystem of trusted suppliers across Europe’s ports, airports, borders, and public facilities. 

If Chinese state support allows Nuctech to offer lower prices or better terms in European tenders, the issue is no longer ordinary price competition. It is China’s industrial policy entering Europe through public procurement—and reshaping sensitive markets from within. 

Indeed, Nuctech took a large slice of Europe’s security-screening markets: in sea-cargo and container screening, estimates put its share between 70 and 90 percent in 2020, depending on whether one uses Nuctech’s own figure or the U.S. State Department estimate reported by the Wall Street Journal. It means that a Chinese state-backed company—a major rival of the EU and the U.S.—inspects the majority of goods entering and moving through European territory. In addition, Nuctech’s airport footprint is also contested, ranging from its claimed modest 10 percent to a reported U.S. estimate of up to 50 percent in passenger-baggage and airport-cargo screening. Overall, Nuctech has won 160+ European public tenders worth more than €120 million (roughly $140 million) since 2014.  

Concerns about Nuctech and its increasing market share in critical markets, particularly in Europe, are escalating when we see Nuctech as a company embedded in China’s Communist Party (CCP) operated system. Originally an offshoot of Tsinghua University—often called China’s MIT—Nuctech was, for much of the 2000s, run by the son of then-party chief Hu Jintao. In 2019, a unit of China National Nuclear Corporation, controlled by China’s State-owned Assets Supervision and Administration Commission (SASAC), became the controlling shareholder of Nuctech’s parent, Tsinghua Tongfang. SASAC’s ultimate owner is the government of the People’s Republic of China. 

The U.S. has been warning Europe about Nuctech for years. During the first Trump administration, the White House National Security Council and other U.S. agencies pushed European governments to stop using Nuctech equipment to secure their borders and ports. The concern was that modern scanners can be connected to databases containing customs records, shipping manifests, passenger information, and, in some cases, biometric details. In American eyes, that made Nuctech less like an ordinary hardware vendor and more like a possible access point into sensitive public infrastructure. 

In December 2020, the U.S. Commerce Department’s Bureau of Industry and Security (BIS) added Tongfang Nuctech Technology Ltd. to its Entity List, an export-control blacklist. This means U.S. companies generally need a license before sending covered American technology or goods to Nuctech, and those licenses are reviewed with a strong presumption against approval. The Federal Register notice stated that Nuctech was added for activities that were contrary to U.S. national security interests, specifically related to cargo screening. According to the U.S. government, Nuctech equipment could weaken efforts to prevent the illicit trafficking in nuclear and radioactive materials. 

If the market data and U.S. warnings were not enough to make Europe rethink doing business with Nuctech, Beijing’s reaction to the EU investigation should have been. China did not respond as the Commission’s inquiry was a routine procedure. It could have argued that Nuctech had followed the rules, or that the Commission had misunderstood the facts and provided evidence as requested by the Commission. Instead, Beijing attacked the legitimacy of the investigation itself, labeled it “an improper exercise of extraterritorial jurisdiction” and ordered organizations and individuals not to comply with it. 

That answer is revealing because the EU is not investigating a Chinese company inside China. It is asking whether a Chinese company operating across Europe may have benefited from Chinese state support in ways that distorted European competition. Nuctech has a remarkable European presence: its equipment has reportedly been installed across 26 of the EU’s 27 member states. It has European subsidiaries, including in Poland and the Netherlands, and has also developed links with European research institutions. For example, the Warsaw University of Technology faculty page reported a delegation visit to Nuctech. Warsaw aimed to deepen cooperation and explore new R&D projects, and said the faculty had signed a letter of intent with Nuctech the previous year. This is precisely the kind of institutional entanglement the National Association of Scholars has long warned about in the higher-education context. 

For any company that wants access to Europe’s open market, answering regulatory questions should be part of normal business operations. Beijing’s response suggests something different: China appears to treat Nuctech’s commercial interests as an extension of its state sovereignty. 

That is the deeper lesson of the Nuctech case. European leaders still tend to think in silos. For example, procurement officials see a cheaper scanner, competition authorities see a market-distortion case, data regulators see privacy questions, security agencies see critical infrastructure, universities see research partnerships, foreign ministries see diplomatic issues. Each view captures part of the reality, but none captures the whole. The danger is the classic elephant-and-the-blind-men dilemma: each institution grasps a different part of the animal and assumes it understands the entire creature. 

China, instead, connects markets, law, technology, universities, companies, and state power as parts of the same system. That is why a European market investigation became, in China’s telling, a sovereignty dispute. Europe needs to stop pretending that procurement, competition, data protection, research security, and foreign policy are separate files. The Nuctech case reveals that the two files are the same. 

The data-protection angle makes the contradiction sharper. Europe has been willing to confront U.S. technology companies over advertising, social media, online tracking, and consumer data. Yet a Chinese company supplying screening systems at airports, ports, and borders raises a far more concrete question: who has access to the images, records, and technical information generated by machines that inspect people, their luggage, and personal belongings, and cargo shipping in and out of Europe? 

Make no mistake, facial images, body scans, temperature readings, travel records, and inspection images can become highly sensitive when they are connected and transferred to third countries. Under Europe’s own privacy rules, biometric data used to identify a person and health-related data receive special protection. If Europe worries about what Meta or Google may infer from Europeans’ online behavior, it should be at least as worried about systems that process information from border crossings, airport security lines, or customs inspections of its citizens. 

What makes things worse is that China’s National Intelligence Law requires organizations and citizens to support, assist and cooperate with national intelligence work in accordance with the law. That does not prove Nuctech has misused any data in Europe. But it does mean that a Chinese company profiling travelers carries a level of risk that Europe does not seem prepared for.  

The old duck test applies here. If it looks like a duck, walks like a duck, and quacks like a duck, it is probably a duck. If a company emerges from a state-linked innovation ecosystem, operates in sensitive infrastructure, receives alleged state support, faces national-security scrutiny in the United States, and is then defended by Beijing as a matter of sovereignty, Europe should examine the whole bird. Europe does not need to copy every American solution. However, it does need the American habit of connecting the files. Nuctech is not just another procurement story, a subsidy case, or a data-protection concern, but Europe’s China-policy litmus test. 

Lilla Nóra Kiss, PhD., is senior fellow for international affairs and academic integrity at the National Association of Scholars.