The European Union could face an estimated €367.8 billion ($434 billion) loss over the next five years should Brussels exclude Chinese suppliers under a proposed revision of its Cybersecurity Act, according to a joint report by the China Chamber of Commerce to the EU and KPMG.

The cumulative economic losses for EU member states would be "equivalent to nearly two full years of the EU's annual budget," according to the report released on Wednesday.

Germany would bear the heaviest burden, with an estimated loss of €170.8 billion, followed by France at €46.3 billion and Italy at €36.5 billion.

The report was issued in response to the EU's draft revision of the Cybersecurity Act, which introduces highly subjective and arbitrary "non?technical risks" under the guise of cybersecurity and supply?chain security.

Specifically, the draft would identify "countries posing cybersecurity concerns" and "high?risk suppliers", then exclude those listed countries and suppliers from EU supply chains across 18 sectors, including energy, transport, and information and communications technology.

"The criteria for identifying so?called 'high?risk suppliers' appear to be politically targeted," said Liu Jiandong, chairman of the CCCEU. "This approach politicizes commercial decision?making and runs counter to the EU's own principles of equality and non?discrimination."

Liu warned that the proposal could damage the EU's digital competitiveness and economic security. "We firmly oppose a one?size?fits?all, mandatory exclusion policy. Rational dialogue, not security?driven decoupling, should guide cooperation between China and the EU in key industries," he added.

The report notes that to date there is "no substantiated evidence" of a technical backdoor or violation of EU cybersecurity rules by Chinese companies operating in the bloc.

It further argues that the measures may violate bilateral investment treaties between China and most EU member states, potentially triggering compensation claims and multi?level litigation. The proposal could also breach core World Trade Organization rules, risking further international trade frictions.

The report stresses that mandatory replacement of Chinese suppliers is "unlikely to achieve meaningful security gains". Instead, it warns of systemic negative effects: innovation budgets could be crowded out, fiscal burdens on member states increased, and household incomes eroded.

wangkeju@chinadaily.com.cn