Europe’s Great Catch-Up on China

With the Ukraine war as a wake-up call, Europe is gradually coming to grips with the China threat.

By , a diplomacy and national security reporter at Foreign Policy, and , a reporter at Foreign Policy.
07 December 2022, Saxony, Freiberg: Two employees work in crystal growth at Freiberg-based Compound Materials GmbH. Gallium arsenide wafers for microelectronics and optoelectronics are produced here. These are used for high-frequency components for 4G/5G communication or are used in LEDs or lasers. Photo: Jan Woitas/dpa (Photo by Jan Woitas/picture alliance via Getty Images)
07 December 2022, Saxony, Freiberg: Two employees work in crystal growth at Freiberg-based Compound Materials GmbH. Gallium arsenide wafers for microelectronics and optoelectronics are produced here. These are used for high-frequency components for 4G/5G communication or are used in LEDs or lasers. Photo: Jan Woitas/dpa (Photo by Jan Woitas/picture alliance via Getty Images)
07 December 2022, Saxony, Freiberg: Two employees work in crystal growth at Freiberg-based Compound Materials GmbH. Gallium arsenide wafers for microelectronics and optoelectronics are produced here. These are used for high-frequency components for 4G/5G communication or are used in LEDs or lasers. Photo: Jan Woitas/dpa (Photo by Jan Woitas/picture alliance via Getty Images)

The United States and European Union have struggled for years to see eye to eye on China, but that is slowly, if unevenly, changing as more European leaders raise alarm bells about the West’s overreliance on Chinese technologies and investments and a brewing geopolitically rivalry with Beijing. 

For several years, EU leaders have chafed at the hawkish stance that has settled into most of Washington when it comes to Beijing and quietly rolled their eyes at some of the most hardline anti-China lawmakers in the United States who have advocated for a full economic decoupling from Beijing. Now the China hawks are starting to gain more traction in Brussels and other European capitals, spurred by Beijing’s coercive economic practices, the threats of spyware embedded in its technology, and the grim new feeling of vulnerability to geopolitical tensions brought on by Russia’s invasion of Ukraine. 

In Western Europe, the Netherlands is mulling a plan to join U.S. export restrictions on Chinese semiconductors, Germany has blocked a series of high-profile Chinese tech investments, and Belgium is scrutinizing Chinese investments in its port infrastructure. In the east, smaller EU powers are strengthening ties with Taiwan despite sharp backlash from Beijing, and the Baltic countries have bailed on China’s efforts to make trade inroads in the region. 

The United States and European Union have struggled for years to see eye to eye on China, but that is slowly, if unevenly, changing as more European leaders raise alarm bells about the West’s overreliance on Chinese technologies and investments and a brewing geopolitically rivalry with Beijing. 

For several years, EU leaders have chafed at the hawkish stance that has settled into most of Washington when it comes to Beijing and quietly rolled their eyes at some of the most hardline anti-China lawmakers in the United States who have advocated for a full economic decoupling from Beijing. Now the China hawks are starting to gain more traction in Brussels and other European capitals, spurred by Beijing’s coercive economic practices, the threats of spyware embedded in its technology, and the grim new feeling of vulnerability to geopolitical tensions brought on by Russia’s invasion of Ukraine. 

In Western Europe, the Netherlands is mulling a plan to join U.S. export restrictions on Chinese semiconductors, Germany has blocked a series of high-profile Chinese tech investments, and Belgium is scrutinizing Chinese investments in its port infrastructure. In the east, smaller EU powers are strengthening ties with Taiwan despite sharp backlash from Beijing, and the Baltic countries have bailed on China’s efforts to make trade inroads in the region. 

“Europe is finally getting through its head that yes, we need to think more strategically about long-term investments from China, but for our own good and not just by grudgingly plodding along with what Washington does,” said one senior European diplomat, who spoke on condition of anonymity. “There’s still a big difference between how the Europeans and U.S. view China, but Europe’s game of catch-up is picking up pace.”

That dawning sentiment is being welcomed with open arms in Washington, where officials under both the former Trump and current Biden administration have issued frequent warnings about the geopolitical and intelligence vulnerabilities of Chinese telecoms firms building up Europe’s 5G infrastructure or taking majority stakes in major European ports. 

“Over the last five years the relationship toward China has changed dramatically, really dramatically,” Margrethe Vestager, the EU’s top commissioner on competition, told Foreign Policy earlier this month. 

The slow sea change in Brussels could do much to smooth over underlying tensions between Washington and its European allies at a perilous moment in transatlantic relations, when both sides are scrambling to help Ukraine fight against a massive Russian invasion and China expands its geopolitical and economic clout on the world stage.

Europe could also face new pressure from Capitol Hill next year to harden its stance on China as Republicans take over the House of Representatives and push the Biden administration and U.S. allies to do more to confront China’s protectionist trade practices and outsized control of global supply chains. 

Beijing hasn’t had much luck so far convincing Europe that Washington’s warnings are overhyped—and it may have to thank Russia for that. Russia’s war in Ukraine served as a stark wake-up call to the EU that it was ill-equipped to manage a major war on its doorstep and much too reliant on Russia for its energy needs, officials and experts said. As Europe scrambles to wean itself off of Russian oil and gas, new questions are arising about the vulnerability of its critical infrastructure and supply chains, especially semiconductors and chips, port facilities, 5G networks, and other key bits of the economy that are increasingly in Chinese hands.

As the war in Ukraine enters its tenth month and the death toll from Russia’s invasion mounts, China has also backed Russia diplomatically at the United Nations and sought to expand trade ties in a way that provides economic lifelines to Moscow’s embattled and heavily-sanctioned economy, trends that will likely further drive European capitals away from Beijing.

“What may be finally helping Europe wake up to the China threat is Beijing helping Moscow and giving it more diplomatic cover to carry out the war,” the senior European diplomat said. The diplomat said that Eastern European member states, which view Russia’s invasion as more of an existential threat than their western neighbors, may be waking up to the China threat more quickly than Western Europe. 

There are some more signs of a shift, however. The Netherlands has reportedly agreed in principle to join U.S. export controls on Chinese semiconductors, though no official announcement has been made and the country’s foreign trade minister Liesje Schreinemacher said in November that it would not “copy the American measures one-to-one.” The United Kingdom and Germany have in recent months blocked Chinese companies from purchasing semiconductor manufacturing facilities on their soil, citing national security concerns. 

And while there is increasingly greater alignment between Europe and the United States on China, further escalation by the Biden administration could raise questions as to how far Western allies will be willing to sign on to additional decoupling efforts.

That shouldn’t stop Washington from moving unilaterally, said Nazak Nikakhtar, who was undersecretary for industry and security at the Department of Commerce during the Trump administration. Nikakhtar was heavily involved in the Trump administration’s efforts to curb Chinese telecoms company Huawei, and the pressure it successfully exerted on European allies to ensure they signed on.

“Europe, of course, was in different places about the threat, but we moved unilaterally; we had those conversations and they moved in their own way,” Nikakhtar said. “So they didn’t do export controls the way that we had told them to do…they started using their own internal legal regulatory mechanisms to do it.”

Still, the progress on the European side has been too slow and too uneven in the eyes of some U.S. policymakers impatient to have European allies fully on board with their hawkish approach to China. 

When German Chancellor Olaf Scholz visited Beijing to meet with Chinese President Xi Jinping last month, he arrived with a delegation of German trade and business leaders in tow, angering some lawmakers in both the EU and Washington with his message that Europe was still open for Chinese business. EU countries, straining from inflation and the energy crunch caused by Russia’s war in Ukraine, may look to boost trade with China to ease their economic pain.

Most, but not all, EU members have set up mechanisms to screen foreign direct investments for possible national security vulnerabilities with an eye toward  Chinese investments in Europe’s critical infrastructure. And as wary as Europe has grown, it hasn’t gone full hawkish.

“I don’t think Europe has as strong a take of the geopolitical conflict with China as the U.S.,” said Xiaomeng Lu, director of geo-technology at Eurasia Group. “Europe still believes some trade relationship with China is good, and the posture—geopolitical dynamic with China is less adversarial between [the] EU and China compared to the U.S.-China tension.”

Some of this makes sense, the EU’s defenders say. After all, the Biden administration needs to coordinate its China message across just one government, while the EU needs to coordinate across over two dozen countries.

“China is a unifying element across the political spectrum in the U.S.,” Stefano Sannino, the EU’s number-two diplomat, told Foreign Policy in a recent interview. “In Europe, we are 27 member states that have all different sensitivities. We need to also bring all these countries on the same line. And it’s the work that we are trying to do.”

Sannino insisted that the United States and EU largely see eye-to-eye on China. “I think in terms of assessment, of vision, of what are the challenges, the threats, we do not have any difference,” he said.

The debate is playing out against the backdrop of a new campaign by the United States to bring back critical infrastructure, such as  semiconductor and chip manufacturing, that U.S. policymakers argue has been outsourced to China for too long. A core component of this strategy involves bringing the production and manufacturing of critical infrastructure to U.S. soil, or at least the soil of U.S. allies. Experts say the United States needs to move in lockstep with the EU on export controls and trade restrictions to re-shore critical supply chains because of how interconnected the global economy is. Re-shoring chip production, for example, is going to be a lot easier if Washington can coordinate its plans with Europe. 

“Global export controls have become a team sport,” said Courtney McCaffrey, a geopolitical analyst with EY, the global consulting firm formerly known as Ernst & Young. “The global economy is so interconnected that the most effective way for the U.S. to achieve its policy objectives is with multilateral coordination.”

This has already led to opportunities for the EU to boost its own industrial base, with major multibillion dollar investments from U.S. chipmaker Intel into new chip factories in Italy and Germany. Still, U.S. efforts to bring back critical supply chains have also stoked friction with the EU, particularly over a massive new U.S. bill that throws billions of dollars of subsidies and tax breaks at green business and technologies such as renewable energy and electric vehicles.

Where things go from here depends on the shift of power in Congress, the continued impact of the war in Ukraine, and growing tensions over Taiwan. But Washington is likely to keep putting the screws to China regardless of whether Europe is standing shoulder-to-shoulder. 

“If you have a national security threat, move, address it,” Nikakhtar said. “Work on your allies, but give them the flexibility to move at their own time.”  

Robbie Gramer is a diplomacy and national security reporter at Foreign Policy. Twitter: @RobbieGramer

Rishi Iyengar is a reporter at Foreign Policy. Twitter: @Iyengarish

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