European Union moves to shield sensitive tech from China

The European Commission has drawn up a list of sensitive technologies to be carefully scrutinized for the risks they pose in rival hands — principally those of China, according to analysts, although EU officials insisted they were not concerned about any particular country.

"Technology is currently at the heart of geopolitical competition," European Commission Vice President Vera Jourova said Tuesday, 3 October at a press conference in the French city Strasbourg. "The EU wants to be a player and not a playground. And to be a player we need a united EU position, based on a common assessment of the risks."

In the wake of pandemic-induced supply chain chaos and the energy crisis following Russia's war in Ukraine, the European Union has become much more wary of dependencies. For example, its former reliance on Moscow for natural gas and continued need for China's critical minerals, key for clean energy tech.

As a result, the bloc is developing a strategy this year to guarantee its "economic security." Tuesday's announcement is part of this. It also follows a range of similar steps taken by the US, in its approach to Beijing in particular.

While the EU executive branch was at great pains not to single out or even mention China on Tuesday, the annoucement clearly aligns with a broader strategy of "de-risking" relations with Beijing and others, as espoused by European Commission President Ursula von der Leyen, experts told DW.

What has been proposed?

For now, all the European Commission has done is identify four main sensitive technology areas: advanced semiconductors, artificial intelligence, quantum computing and biotechnology.

The next step is to consult EU member states over the coming months and then decide what measures to take next year. This could mean export controls. But it may not.

EU officials briefing reporters in Brussels on condition of anonymity stressed that these measures might not be about restricting sales in the end. It could also be about increasing investment in the EU, one official said, or even partnering with others to reduce dependencies.

What's so risky about this technology?

The EU executive branch selected the risk areas on the basis of three criteria: its general transformative power — that is, how much change it could lead to — its potential for military use and whether it could be involved in human rights infringements.

Agathe Demarais, an analyst from the European Council on Foreign Relations, told DW that it was very clear that the categories chosen were targeting risks from China.

Firstly, "semiconductors have dual use applications for both civilian purposes — iPhones — and military purposes, missiles," she said.

"The EU and the US are very cautious about doing anything that would help China advance the capabilities of its military," Demarais said, pointing to escalating tensions between Beijing and the island of Taiwan.

Secondly, the EU's concerns over artificial intelligence technology also relate to the protection of civil liberties, Demarais said. China has used facial recognition to track dissidents. The EU is currently in the process of negotiating the world's first law regulating AI, with the mass use of biometric recognition at a distance one of the most contentious aspects of the debate.

Third, the development of quantum computers, which are faster and more powerful then ordinary computers, has military implications, the analyst said. Quantum computers may be able to break the encryption methods used online for everything from private messages to banking. "If you break the encryption of, say, US communications or military communications, it obviously has big implications," Demarais explained.

Finally, biotechnology is used widely in medical science but also raises civil liberties concerns, Demarais said. "It has huge implications, for instance, if China has access to DNA databases," she noted. There are also concerns about the development of weaponry using biotechnology.

Building EU consensus not easy

The EU is still a long way from actually taking action. John Lee, director of consultancy East West Futures, told DW he thought the end-of-year goal to finish joint risk assessments seemed highly ambitious.

In Lee's opinion, the European Commission also seems to have listened to actors who preferred "positive measures such as industry assistance rather than negative measures such as export control."

For Demarais of the ECFR, the big issue is whether EU states can agree on how tough to get. Even the scope of the list published Tuesday was narrower than she had expected and not as expansive as similar initiatives in the US, she said. Washington imposed restrictions on exports of advanced, AI-enabling semiconductors to China last year.

"The de-risking discourse has created divisions among EU member states. Notably, Germany's economy is far more exposed to China than other European economies," Demarais said.

"German exports of goods and services to China account for more than 3% of German GDP — the highest rate in the EU and double the levels in France, Italy and Spain," Demarais said. "Meanwhile, eastern European states have long been hawkish on China, which was further solidified by Beijing's implicit support for Moscow's invasion of Ukraine."

In Beijing, the new list will likely be read as a further sign of the EU trying to distance itself from China, she said. "I think they're worried about the context of broader tensions with Western countries because Western countries are key export markets [for China]."