The EU has revealed the first four critical technologies to de-risk relations with China. Advanced semiconductors, artificial intelligence, quantum technologies and biotech will be the initial focus of an economic security strategy, Brussels announced, because they present the “most serious and immediate risks” to the union’s security and resilience. The four broad tech categories are seen as those most likely to strengthen rivals’ industries and militaries. “Europe is adapting to the new geopolitical realities, putting an end to the era of naivety and acting as a real geopolitical power,” said EU Internal Market Commissioner Thierry Breton. China is not mentioned in the report, and the EU asserts that the strategy is country-agnostic. Breton told a press conference that “this is not against anyone”. “This is not against any continent, country or whatever, it is for us in Europe. We are working for the general interest of our fellow citizens.”
But officials privately admit that China is the focus of a policy that was launched during a speech by European Commission President Ursula von der Leyen in March about the threat posed by Beijing. Other, more immediately adversarial actors such as Russia and North Korea do not have ready access to EU technology, nor does it flow quite as freely to Iran as it does to China. However, it is believed that the focus on China will make it even more difficult to convince an already skeptical group of prominent member states that de-risking is necessary. Eventually, curbs could be placed on exports or investments made by European firms in hi-tech sub-sectors identified as high risk. The policy could also lead to the deployment of EU funds to bolster industries seen to be under threat.
Agathe Demarais, Expert on geo-economics at the European Council on Foreign Relations, described the list as a “key signal of the bloc’s willingness and ability to pursue efforts to de-risk from China”. “It provides concrete insights into the EU’s thinking about what the risk of doing business with China really is – a key question for the EU to answer before initiating any risk mitigation efforts,” she said, adding that the narrow list reiterates Brussels’ stance “that it is willing to de-risk, not decouple, from China”. Six more technologies are in line for investigation next spring. They are advanced connectivity, navigation and digital technology – including internet of things (IoT) and distributed ledger technology mostly associated with blockchain – advanced sensing technology, space and propulsion technology, energy technology, robotics, and advanced materials.
However efforts to compile the list have been beset by internal haggling between the commission’s pro-trade and protectionist factions, sources said. There are disagreements on how much control the EU should assert over private companies, but also fears that opening the coffers for state aid would be a lopsided move to benefit the big players among member states, including France and Germany. The European Commission will now conduct risk assessments with its 27 member states to see how and where they are exposed when it comes to technological security and leakages in critical technologies. It hopes to conclude this by the end of the year, but insiders said that the timeline was “extremely optimistic” given the complexity of the technologies at hand – as well as the expected resistance from member states. While member states have loosely thrown their rhetorical support behind a plan to “de-risk” ties with China, there is little coherence on how exactly to do so.
France has pushed for an investigation into Chinese subsidies of electric vehicles, announced by the EU last month, but Germany opposes it. Asked at a Berlin forum about the risk of a trade war emanating from the probe, German Chancellor Olaf Scholz replied: “Obviously this will not happen.” China has repeatedly warned that de-risking is a euphemism for decoupling. On a trip to Beijing last month, EU Trade Commissioner Valdis Dombrovskis emphasized that the EU wants to maintain strong business ties with China, but made clear that the nature of these relations must change. The European Parliament also approved the adoption of an “anti-coercion instrument”, a powerful trade weapon that would allow Brussels to slap tariffs, quotas, export controls, or market freezes on countries seen to be engaged in economic bullying. The vote passed by a landslide, with a series of lawmakers taking the floor to state that the tool would have been useful to counteract China’s perceived economic coercion of Lithuania in 2021, the South China Morning Post reports.
According to the China Association of Automobile Manufacturers (CAAM), the country exported 727,000 new electric vehicles in the first eight months, a year-on-year increase of 110%. Europe and Southeast Asia are two major export markets for Chinese NEVs. Cui Dongshu, Secretary General of the China Passenger Car Association (CPCA), said the EU should take an objective view on the development of China’s EV industry instead of using unilateral economic and trade tools, which obstruct the growth of the segment and increase operational costs of Chinese EVs in the European market. Cui firmly opposed the EU’s anti-subsidy probe, emphasizing that China’s NEV exports are growing rapidly due to a highly competitive industrial chain under sufficient market competition, and not because of the so-called “government subsidies”, the China Daily adds.
