China has lifted export controls on computer chips vital to car production, the country’s commerce ministry has said.

Exemptions have been granted to exports made by Chinese-owned Nexperia for civilian use, it said, which should help carmakers who had feared production in Europe would be hit.

In October, the Dutch government took control of Nexperia, which is based in the Netherlands but owned by Chinese company Wingtech, to try to safeguard the European supply of semiconductors for cars and other goods.

In response, China blocked exports of the firm’s finished chips. However, it said earlier this month it would begin easing the ban as part of a trade deal struck between the US and China.

While Nexperia is based in the Netherlands, about 70% of its chips made in Europe are sent to China to be completed and re-exported to other countries.

When it took control of the company, the Dutch government said it had taken the decision due to “serious governance shortcomings” and to prevent the company’s chips from becoming unavailable in an emergency.

But when China blocked exports of chips from Nexperia, there were worries that it could create global supply chain issues.

In October, the European Automobile Manufacturers’ Association (EMEA) had warned Nexperia chip supplies would only last a few weeks unless the Chinese ban was lifted.

Earlier this month, the EMEA’s director general Sigrid De Vries told the BBC that “supply shortages were imminent”.

Volvo Cars and Volkswagen had warned that a chip shortage could lead to temporary shutdowns at their plants, and Jaguar Land Rover also said the lack of chips posed a threat to its business.

But on Saturday, EU trade commissioner Maros Sefcovic announced in a post on X that China had agreed to “the further simplification of export procedures for Nexperia chips” and it would “grant exemption from licensing requirements to any exporter” provided the goods were for “civilian use”.

“Close engagement with both the Chinese and Dutch authorities continues as we work towards a lasting. stable predictable framework that ensures the full restoration of semiconductor flows.”

In its statement, China’s commerce ministry called on “the EU to continue exerting its influence to urge the Netherlands to correct its erroneous practices as soon as possible.”