The European Commission is gearing up to enhance the economic security of the European Union with a keen eye on China. Set to be unveiled on Wednesday, the plans involve a comprehensive approach to scrutinize foreign investment more closely and impose stricter controls on the export and outflow of technologies, particularly to competitors like China.
A proposed new law will mandate all EU member countries to assess and potentially block foreign investments within the bloc if they are deemed to pose a security risk. The commission will present a wide-ranging document for debate, outlining ideas on better coordinating export controls, especially for products with potential military applications. Additionally, efforts will be made to tighten control over participation and access to research in crucial technologies.
The plan also advocates for measures to limit the leakage of sensitive technologies to destinations or countries labeled as “of concern.” While the plans avoid naming any specific country, the EU emphasizes collaboration with “reliable partners” and its policy of “de-risking” to reduce economic dependence on China. This move is driven by concerns over China’s dominance in green technology and key mineral production, as well as its close ties to Russia.
Implementing EU-wide measures faces challenges, as export and investment controls are areas guarded by individual member states. However, there is a growing recognition that the EU must leverage its economic strength to effectively compete with global players like China and the United States. Acknowledging the complexities, one EU diplomat notes, “It’s a hot potato that could take some time to go forward. Implementation will be difficult… but there is a new geopolitical reality.”
The initiative for bolstering the EU’s economic security was launched in June by the EU executive, citing the COVID-19 pandemic, Russia’s invasion of Ukraine, cyber and infrastructure attacks, and heightened geopolitical tensions as factors exposing new risks. Part of the strategy involves enhancing EU competitiveness, diversifying supply and export markets, investing in advanced technologies like semiconductors and quantum computing, and fostering closer partnerships with allies.
