It’s time to remember the takeover of the robot manufacturer Kuka. Almost everyone has seen its products, at least in videos from car factories on television, where the orange arms screw and weld parts together. High-tech from Swabia, a medium-sized company success story, an ideal example of the pride of German industry. The automated factory specialist has now been owned by a Chinese company for more than six years. Warnings about a sell-off of German cutting-edge technology, as articulated by the then EU Commissioner Günther Oettinger (CDU) or former Federal Minister of Economics Sigmar Gabriel (SPD), were ignored – from a purely legal perspective there was nothing that could be done about the takeover. And politically, dealings with China were still relaxed.
That’s different today. While the decoupling from Russia is still underway, now a tough process, officials in Brussels and Europe’s capitals are rushing to reorganize their relationship with China. The EU Commission therefore presented an “economic security strategy” a few months ago. Given the global crises, the war in Ukraine and a people’s republic with ambitions to become a world power, Europe needs a roadmap to reduce economic and security risks. On the one hand, the EU should become less dependent on foreign countries, for example when it comes to importing raw materials. On the other hand, it is important to prevent critical technologies from migrating and falling into the wrong hands.
Now the Commission has spelled out for the first time what it wants to focus on. On Tuesday, Commission Vice-Presidents Thierry Breton and Věra Jourová presented a list of ten areas, four of which they consider “particularly sensitive and urgent.” In addition to new types of semiconductors and machines for producing them, this also includes artificial intelligence, quantum computers and technologies, and biotechnology. “Europe is adapting to the new geopolitical realities, ending the era of naivety and acting as a real geopolitical power,” said Breton when presenting the plans.
Compared to what the EU is planning to do, the language is decidedly cautious
The Commission is initially leaving it open as to where this will lead: First, it will involve a risk analysis in working groups with the member states. And as is well known, they have varying degrees of reservations about China and some have little desire for protectionist measures. “The risk analysis will be objective and neither its results nor any follow-up action can be anticipated at this stage,” the Commission said. The risk assessment in the four identified sectors should be completed by the end of the year, and discussions on specific measures will follow in the spring. It’s about “an open dialogue with the member states,” says an EU official involved in the plans. “We don’t want to be biased in our position.”
The language is extremely cautious considering what the EU is planning to do. Because the end result could be nothing less than a rejection of the principles of European politics: trust in openness, free trade and a market economy instead of state interventionism. Commission President Ursula von der Leyen (CDU) had sharp words about China in March: The EU must prevent the capital and expertise of European companies from contributing to “improving the military and intelligence capabilities of those who are also system competitors.” she said at the time in a keynote speech in which she announced the economic security strategy.
In the somewhat hackneyed triad that characterizes China as a “partner, competitor and systemic rival,” von der Leyen primarily has the third part in mind. With her comparatively tough stance, the transatlantician is not in the middle of Europe, but rather on the edge, among those who want to free themselves from Chinese dependence as quickly as possible. Von der Leyen also puts it this way: the focus is on “risk reduction, not decoupling”, as Chancellor Olaf Scholz (SPD) always emphasizes. However, risk reduction is a term that can be used to imagine many things.
The Commission is not talking about China – but everyone knows who it is talking about
And it shouldn’t just be about China, although the People’s Republic is obviously the elephant in the room. Just a few weeks ago it became clear how sensitive the government in Beijing is reacting. The EU Commission announced that it would investigate China’s state subsidies for electric cars because of unfair competition.
As early as June, the commission made an effort not to focus on China. The 14-page strategy paper on economic security doesn’t mention China at all. The EU needs “a comprehensive strategic approach to economic security, risk reduction and promoting its technological edge,” it said. This includes both a new industrial policy to promote domestic production and innovation, as well as new partnerships with countries outside the EU. But it also mentions, among other things, “trade defense measures, foreign subsidies, 5G/6G security, foreign direct investment screening and export controls and the new anti-coercive instrument.” At the same time, one must “assess the effectiveness of the EU instruments and expand them if necessary”.
How sharp the instruments the EU will ultimately use and whether there will be new ones now depends on the member states. It doesn’t currently appear that everyone is speaking with one voice when it comes to China. However, everyone is aware that something has to happen to make Europe’s economy more resilient. And would something like Kuka happen again in Germany today? At least it would be less likely.