China and EU Strike Sanction Swap Deal to Protect ASML Supplier as Chinese Exports Surge Toward $1 Trillion Surplus

The European Union is set to lift sanctions on an unnamed Chinese firm accused of aiding Russia's war in Ukraine, in exchange for China removing restrictions that threatened the survival of Germany's Sindlhauser Materials GmbH, a critical supplier to semiconductor equipment maker ASML Holding. The arrangement, described by people familiar with the discussions, reflects the mutual economic pressure both sides face and marks a significant diplomatic concession by the EU on its Russia-related sanctions framework.

The deal comes as EU leaders weigh broader steps on China trade amid domestic pressure, and as Beijing signals willingness to work with Brussels to stabilize trade ties. China's auto industry group separately welcomed the China-EU trade consensus, saying it aids industry stability, a reference to an earlier agreement to limit Chinese hybrid vehicle exports to the bloc.

China's September trade data released the same day underscored the stakes. Exports jumped 36.3% year-on-year, the fastest pace since February, far exceeding analyst expectations of 25.5% growth. The country's cumulative trade surplus reached $938.11 billion through September, putting a full-year figure above the 2025 record of $1.189 trillion well within reach. September's monthly surplus alone widened to $133.53 billion, including a 20-month high $34.01 billion surplus with the United States and a $34.8 billion surplus with the EU. China's yuan held steady on the data while domestic stocks fell.