Inside Out | As Europe seeks to ‘de-risk’ from China, it only has itself to blame for falling behind

Instead of lashing out at China for investing massively in electric vehicles and clean power, the EU should ask itself why it is so far behind in its own energy transition

China’s competitive lead is the natural result of long-term planning and a large economy, not protectionism and subversive export policies

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Geely Auto’s Zeekr electric vehicles ready for shipment to Europe are seen at Taicang port in Jiangsu province, on August 24. Chinese vehicles account for 8 per cent of Europe’s EV market, a share that is growing fast. Photo: Bloomberg

Published: 8:00pm, 24 Sep 2023

As Valdis Dombrovskis, Europe’s trade commissioner, rolls up his sleeves for four days of trade haggling with his Chinese counterparts this week, probably railing against the size of China’s trade surplus and threatening tariffs on its electric vehicles – which some believe amount to an existential threat to Europe’s car industry – he might do well to ponder a few facts.

First, since China accounts for just under 30 per cent of global manufacturing output, driven first and foremost by the powerful demand generated by its 1.4 billion consumers, there is not an economy in the world that won’t have to wrestle with fierce, substantial and potentially irreversible competition from Chinese companies.

No one bothers much about China’s near-monopoly in exports such as clothing, shoes, watches, home appliances, air conditioners, hardware products or adult sex products. But there is a legitimate conversation to be had about certain sensitive product dependencies that threaten every country’s economic, health or military security. However, these might be better tackled in a multilateral context.

Second, according to the Australian Strategic Policy Institute’s critical technology tracker, China is a world leader in 37 of 44 critical technologies that underpin competitiveness in the industries of the future.

These include nano materials, 5G and 6G, hydrogen and ammonium power, supercapacitors, electric batteries and synthetic biology. In many areas, China’s lead is so great that it poses a “high monopoly risk”. “China has built the foundations to position itself as the world’s leading science and technology superpower,” the institute wrote. “For some technologies, all of the world’s top 10 leading research institutions are based in China.”

If you want to regard this as a problem, then it sits not among China’s exporters but in its education system and the fact that it produces so many scientists and engineers. It is far more than just a European Union problem, and should probably be addressed to countries’ education ministers.