China’s Digital Power: Assessing the Implications for the EU

Please note: Below you will find a summary of the introduction and chapters contained in the first public report by Digital Power China (DPC), a research consortium convened by DGAP Research Fellow Dr. Tim Rühlig. The complete report can be downloaded as a PDF here.

Introduction

An introductory chapter outlines a framework for Digital Power China’s analysis of China’s digital ambitions and their impact on Europe and carves out how the research consortium could contribute to the process of recalibrating EU policy in light of China’s growing technological footprint. The DPC – in collaboration with the China in Europe Research Network (CHERN) – seeks to interact with EU officials on China’s digital policies in six specific areas, which are each the focus of a chapter.

Summary of Chapters

Europe’s Dependence on Chinese Semiconductor Manufacturing

In their chapter, Jan-Peter Kleinhans and John Lee argue that Europe is increasingly dependent on Chinese semiconductor manufacturing capacity. This is especially true for the final production steps in semiconductor manufacturing: assembly, testing, and packaging. While Europe has tried to incentivize the construction of new wafer fabrication capacity in Europe, this final production step has so far received very little attention from policy-makers. This paper argues that an overreliance on Chinese packaging capacity is detrimental to member states’ security and Europe’s long-term technological competitiveness. The authors suggest several concrete policy actions to strengthen Europe’s advanced packaging ecosystem and close collaboration with allies to ensure long-term technological competitiveness vis-à-vis China.

Wireless Networks and EU-China Relations Beyond the “Huawei Debate”: Is China a Partner, Competitor, or Systemic Rival on 5G and 6G?

In their contribution, Liesbet van der Perre and Tim Rühlig discuss some of the challenges in the field of wireless technology following the controversy over the inclusion of Huawei in European 5G networks. They identify slow deployment as a fundamental obstacle to digital innovation in the EU. In addition to addressing the shortage of hardware components, a substantial increase in human resources will be necessary in the long-term. The influx of Chinese researchers based on China Scholar Council funding will need to be discussed in light of potential security risks. Network security risks will require opening up spectrum for private networks in parallel with securing public networks. A more coherent regulatory approach across Europe coupled with investment in European technological strongholds will be essential to avoid the political costs that result from overdependencies. All this leads the authors to opt for a cautious review of EU-China cooperation in the field of wireless technology.

AI and IoT Developments in China and the Relevance for EU Policy: A Scoping Study

The risk of one-sided dependencies is greater with respect to the Internet of Things than artificial intelligence, as China has a competitive advantage in the former, Carlo Fischione, Sanne van der Lugt, and Frans-Paul van der Putten argue in their chapter. If the EU sticks to its principle of open markets even though European companies find it difficult to compete with China in the arena of the more advanced technologies, the EU risks to losing these companies and the Chinese government could leverage the dependency created for its political aims.

Inflaming Transatlantic Tensions? China’s Public Diplomacy Efforts to Influence EU-US Relations

In their initial exploration, Una Bērziņa-Čerenkova, Elena Ferrari, and Julia Voo explore efforts by Chinese government representatives in the EU to influence European public opinion during the 2020 US Presidential elections. Over a four-week period around November 3, 2020, they examine the tweets of 25 Chinese government EU-based Twitter accounts to assess whether there was an enhanced and sustained effort to influence European public opinion on key geopolitical issues. Their analysis identifies Chinese government efforts on Twitter to influence European public opinion on the United States, including through proxy references. Further research is required to establish the link between global Chinese government accounts and European-based Chinese government representatives, as well as to test more advanced tools for tweet retrieval, for example through sentiment analysis.

Power Competition and China’s Technical Standardization

In their chapter on technical standardization, Tim Rühlig and Maja Björk argue that technical standards setting can translate into power in all four dimensions of the digital China challenge outlined above. China’s influence on international standardization is growing, creating challenges for EU interests in the form of politicization, the risk of international bifurcation, and shifts in power over technical standardization. Their paper makes three sets of policy recommendations on ways forward for an EU response to China’s increased standardization power. The strategic importance of technical standards, not least in the emerging competition over high technology, means that they will require strategic responses and even greater attention from the EU in the years to come.

Projecting Digital Power Internationally: Europe’s Digital China Challenge

The contribution of Maaike Okano-Heijmans and Brigitte Dekker discusses the consequences for the EU of China’s digital power projection, especially in China’s neighborhood – a region the EU now calls the Indo-Pacific – and in Europe’s own backyard. China’s moves require the EU and its member states to adopt an integrated approach that connects the dots among the digital agenda, the connectivity agenda, and EU policies on priority regions. The policy recommendations highlighted in this chapter call on the EU to invest in achieving market and standard-setting power, to complement the EU’s regulatory power; prioritize the Indo-Pacific region and Africa; develop issue-based cooperation networks and digital governance that put people first; and invest in digital development assistance and capacity building.

About the Digital Power China Research Consortium

The Digital Power China (DPC) research consortium is a gathering of China experts and engineers based in eight European research institutions, including universities and think tanks. In addition, a European non-resident fellow of a US research institution has joined DPC. The group is devoted to tracking and analyzing China’s growing footprint in digital technologies and its implications for the European Union. Based on interdisciplinary research, DPC offers concrete policy advice to the EU. Tim Rühlig, Research Fellow at the German Council on Foreign Relations (DGAP), is the convenor of DPC and cochairs the initiative with Carlo Fischione, a professor at the Royal Institute of Technology in Stockholm.

DPC systematically pairs technological and country expertise. It is based on rigorous academic research that is combined with experience in the provision of policy advice. The informal group brings together a variety of European researchers in order to pair diverging perspectives from across the continent. Responsibility relies solely with the indicated authors of the chapters and papers published by DPC.

At the time of writing the chapters, the participating researchers were affiliated with the following institutions:

The production of this report has been supported through the COST Action CA18215 – China In Europe Research Network (CHERN – www.china-in-europe.net), supported by the European Cooperation in Science and Technology (COST – www.cost.eu).