Time to strike a balance

JIN DING/CHINA DAILY

Only by breaking the mindset of 'overusing security concepts' and zero-sum games can the EU strike a balance between development and security for win-win outcomes with China

In recent years, industrial changes and value chain restructuring have been accelerating amid mounting geopolitical and security turbulence. In this backdrop, the European Union is emphasizing security issues in its foreign economic policy. The bloc has also shown a tendency of overusing the concept of "security", which is reflected in the anti-subsidy investigation into imports of battery-powered electric vehicles from China.

Driven by the COVID-19 pandemic and the Ukraine crisis, the EU has gradually developed a trend of generalizing the concept of security in its policy.

After the outbreak of the COVID-19 pandemic, various supply chains in the EU, such as medical products, were strained, prompting the EU to regard over-dependence on other countries as an important economic security risk, and making the bloc wary of other countries using interdependence to "coerce and influence".

The outbreak of the Ukraine crisis in 2022 has led to the return of traditional geopolitical security confrontation. Alongside the increasingly fierce energy rivalry with Russia, the EU has deepened its negative perception of excessive dependency and economic coercion, so that when balancing economic interests and economic security, it tilts toward the latter.

In June 2023, the European Commission and its High Representative for Foreign Affairs and Security published a Joint Communication on a European Economic Security Strategy, the first document in its history to map out strategic objectives and policy planning around economic security issues.

In January 2024, on the basis of the Economic Security Strategy, the European Commission adopted five initiatives to strengthen the EU's economic security, by putting forth policy ideas in the fields of outbound investment review, export control of dual-use technologies, research and development support, security precautions for scientific and technological cooperation, and inbound investment screening rules.

Under the dual impact of global industrial changes and spillover effects from geopolitical crises, the decline in the advantages of the EU's dominant industries has been accelerating. Problems such as surging energy costs and insufficient production and innovation capacities have further weakened the EU's industrial competitiveness and aggravated its anxiety.

In September 2024, the European Commission unveiled The Future of European Competitiveness, a report by former European Central Bank president and former Italian prime minister Mario Draghi. The report starts by stressing that boosting competitiveness has become a key issue for the EU to support its welfare, lifestyle and even global status. It not only mentions the downward trend caused by the EU's economic size, labor productivity, development of digital and green industries, and the empowerment of traditional industries by emerging technologies, but also emphasizes that the EU's approach to enhancing competitiveness includes promoting the diversification of key product supplies, safeguarding interests through trade instruments, and strengthening the protection of local technological capabilities from a security perspective.

To ease its anxiety over declining competitiveness, the EU blatantly rolls out trade protectionist measures under the disguise of security concerns, treating highly competitive products from other countries, especially China, as threats and challenges. The issue of electric vehicles is a most obvious example.

When overstretching security concepts in its foreign economic policy, the EU's security agenda has gradually gone beyond the so-called over-dependency problem and de-risking, to further expand to a wider range of areas.

Europe has been more vigorously emphasizing the differences and competition with non-Western countries in terms of values, and calling for more focus on values in its domestic and foreign policies. In recent years, some EU institutions and politicians have claimed that the Ukraine crisis is a war "against European values and the future", and one of "democracy versus autocracy", hyping that their own people are "affected by foreign interference". Some even proposed a Defense of Democracy Package to tackle the threat of foreign interference and block foreign infiltration and influence.

At the same time, the EU has overused the concept of "democracy" in such areas as critical infrastructure, digital technology application and trade and industrial chain cooperation, believing that these areas are at risk of being attacked, exploited and used as levers of influence by other countries. The EU's tendency of de-risking and self-protection is gradually reflected in its protectionist measures in trade, investment, scientific and technological cooperation and other fields.

In the wake of its declining economic competitiveness and the negative impact of the globalization process, the EU has also begun to play up the "security issues" in the industrial sector, constantly hyping the "overcapacity" problem and accusing other countries of producing far too much and squeezing the European industry and market.

Some European politicians have been adding fuel to the fire. For instance, in December 2023, European Commission President Ursula von der Leyen publicly accused China of industrial overcapacity, claiming that exports to Europe have undermined Europe's industrial base by unfair competition. French President Emmanuel Macron has linked the "excess capacity" to what Europe calls an influx of exports to Europe and the concept of European sovereignty and national security.

At the same time, the EU's automotive and photovoltaic industries are advocating that they face an existential threat, and the influx of external products is undermining Europe's industrial autonomy.

The EU's overstretching of security concepts in economic and trade areas has turned into protectionist actions.

The anti-subsidy investigation into the imports of battery-operated electric vehicles from China launched in October 2023 is one of the largest anti-subsidy and countervailing cases by the EU in recent years. The European Commission insists on using high tariff policies and EU countries recently voted in favor of taxation, which reflects rising protectionist sentiments within the bloc and the stubbornness of its security dilemma. It is not conducive to the proper handling of trade frictions and disputes between China and the EU on the basis of objective and rational consideration of each other's concerns, but rather, will push things to the extreme.

As a matter of fact, at present, many European industry insiders are expressing grave concerns over the EU's security-driven protectionism.

A large-scale protest was organized by French cognac producers, the first since 1998, asking the French government and the EU to seriously consider the concerns and the survival of the industry. BMW, Mercedes and other carmakers are also concerned about the "deeper and longer recession" in the development of the industry. Recently, the China Chamber of Commerce to the EU and European Union Chamber of Commerce in China jointly called for mutual trust building between China and the EU, expressing hope for joint efforts by enterprises from both sides to build an industrial ecosystem and tap into the vast cooperation potential in the transformations of green and digital economies.

Therefore, only by returning to the track of correctly viewing market competition, interdependency and security issues, and breaking the mindset of "overusing security concepts" and zero-sum games, can the EU safeguard the common interests it shares with China in a turbulent world, and strike a balance between development and security for win-win outcomes in a rational and balanced way.

The author is an associate research fellow at the Institute of European Studies at the China Institutes of Contemporary International Relations. The author contributed this article to China Watch, a think tank powered by China Daily.

The views do not necessarily reflect those of China Daily.

Contact the editor at editor@chinawatch.cn.