Brussels sharpens its economic and commercial weapons against China | International

The European Commission outlines its plans to deal with China's economic and technological strength and begins to move from talk to action. Control of investments in the European Union, surveillance of European investments in sensitive sectors in third countries, reciprocal responses to economic sanctions... The arsenal is developed in the document European economic security strategy, approved this Tuesday by the Community Executive and advanced by EL PAÍS, which will be analyzed by the leaders of the Member States at the summit next week. The text contains elements to provoke a heated debate, not so much on whether to reinforce tools that already exist, but mainly because of the novel idea of ​​controlling European investments abroad in technological sectors such as robotics, biotechnology or the production of advanced chips. In these areas, by outsourcing or subcontracting some supply chains, technology is transferred and Europe's economic security may be put at risk.

"We need to make sure that the capital of European companies, knowledge and experience are not subject to abusive use by countries that are concerned with uses, for example, military", has remarked the president of the European Commission, Ursula von der Leyen, at a press conference in Brussels. The head of the community Executive has tried to move away from the approach that the strategy has a protectionist intention and anticipate the debate that underlies the new strategy that it can damage the competitiveness of the European market. “Open economies are good for Europe. That will not change in the future ”, has launched Von der Leyen. The spirit, she has argued, is “derisking” rather than disengaging from China, which would also be enormously difficult.

The pandemic, the energy crisis and the acceleration of the double digital and ecological transition have shown that the disengagement from Beijing advocated by the toughest positions can have serious economic consequences for both parties. Europe depends to a large extent on China for many industrial products, but also for critical raw materials (lithium, rare earths) necessary for the green transition or key technologies for the development of renewables (photovoltaic panels).

The strategy comes in the midst of a visit by Chinese Prime Minister Li Qiang to Germany, and in the midst of a trade war between Washington and Beijing, in which the United States seeks to draw the EU closer to its positions and expects more European firmness towards the asian giant. Because although the word China does not appear in the joint communication on the strategy of the Community Executive and the High Representative for Foreign Policy and Security of the EU, Josep Borrell, its presence —as well as that of other autocracies— is intuited throughout the scheme , despite the fact that in its presentation, the Commission has made an effort to point out that there is no specific country in focus. “Security is a concept that has new and multiple dimensions. One of them is economic security. We have learned how dependencies can become weapons”, pointed out the head of community diplomacy, who has highlighted the other side of the strategy: the diversification of partners.

The goal of the EU's new economic security guideline—somewhat toned down compared to von der Leyen's bolder initial approaches—is to reduce excessive dependencies on its foreign partners. And for this, first it is necessary to identify the risks for the European security of these dependencies. Then, remedy them by reinforcing the tools that already exist, such as the control of key technology exports and obstacles to foreign investment in strategic sectors of the EU, and with the possibility of launching new mechanisms such as the control of outward investment. "The objective is to prevent the leakage of sensitive emerging technologies, as well as other products that could have a double use, that is, that operate in a joint civil-military strategy," the strategy states. It is not about focusing only on investments, therefore, but also on "intellectual property or the knowledge” European, say community sources.

The EU also seeks to strengthen the mechanisms to review foreign investments in the EU -since October 2020, the Commission and the Member States have reviewed more than 1,000 transactions-, and in fact, urges the countries of the community club to establish "without delay” these checks. It also highlights the need to review key supplies where it is vulnerable, such as raw materials, semiconductors and car batteries, and to increase investments in emerging technologies that are considered strategically important. Work will be done on a list of "sensitive technologies" for economic security and the risks they entail, explained the vice president in charge of the Competition area, Margrethe Vestager. This is a point above all aimed at that technology that Russia's war in Ukraine has shown can have a double use: elements that are intended for civil affairs, but can also have a military utility, such as some chips.

Brussels will create a working group to analyze all this with the Member States and also with companies, has pointed out the economic vice-president of the Commission, Valdis Dombrovskis. The Community Executive has given itself until the end of the year to have the instrument ready to guarantee the economic security of the EU, an overly optimistic schedule for some voices in Brussels taking into account the debate between its partners.

The Member States do not have a common position on China, although there is a growing consensus to put more focus on the character of Beijing's "systemic rival", above that of "commercial partner" in its current triple definition of "partner, competitor and systemic rival”, still in that order. The EU's relations with the Asian giant will focus a large part of the talks at the summit next week in Brussels, which will also analyze the request to the Member States for more fresh money for expenses such as support for Ukraine, the competition and the regulations on migration that the European Commission has launched on Tuesday.

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