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French analysts call on Europe to unite with the US to fight China’s technological development
fifteen.01.2021 [12:19],
Gennady Detinich

Europe has been hit in part by the U.S.-China trade war, as it has received a number of restrictions directly from the U.S. under Donald Trump. But this should not push the EU into the arms of China, say experts at the French think tank Institut Montaigne. According to the authoritative agency, the European Union should act as a united front with the United States to limit China’s technological advantage.

As the director of the Asian program at Institut Montaigne Mathieu Duchâtel notes in the report, European companies have distrust of the US policy of technological restrictions in China. In a number of cases, the United States stopped issuing licenses to Europeans to trade with blacklisted companies, while American companies continued to work with disgraced Chinese. This has resulted in a competitive advantage for US companies. Few people like this.

However, the analyst states the following in the report: “The end use of semiconductor technology for military purposes is a major challenge in terms of peace in East Asia. Allied countries must recognize that maintaining a technological gap with China is in the interests of international security. “.

Amid ongoing COVID-19 coronavirus pandemic and US restrictions, Europeans seek to strengthen economic ties with China. EU involvement in blocking Chinese SMIC and other tech companies from China risks undermining stronger relations. According to the analyst, EU control over technology transfer to China and good trade relations between the EU and China are not “mutually exclusive”. “In fact, both are possible,” he said in a telephone interview to the Post, pointing to examples in the auto industry where EU control over technology transfer has not undermined relations.

The think tank also recommends that Europe strengthen scrutiny of foreign investment in its technology sector and reduce cooperation with China in education and research in microelectronics if it is seen as having the potential to empower end-users in the military arena in China. However, Duchatel says the difficulty lies in distinguishing between civilian and military end-users of a particular technology, and that “redirection is always possible.”.

“I think there is some degree of mistrust in Europe about the goals of US technology transfer control policies,” Duchatel said. “This is because there have been examples in the past in transatlantic relations where European companies were denied export licenses and then American competitors simply took over.”.

“Many players believe that US restrictions are commercially motivated and do not serve US interests in power competition with China,” the report says. “The collaboration should [help] allay European industry suspicions that US export controls targeting China are not intended to strengthen US firms over their European competitors.”.

According to the expert, China has three weaknesses: blocking access to Western technologies, lack of human resources and a tough economic system that does not allow optimal allocation of resources and does not allow full use of China’s market potential.

SMIC Shanghai Office. Image source: Bloomberg

It seems to us that this case can be viewed from the other side. Blocking access to technology will force you to develop your own. China has more human resources than anywhere else on the planet, with the exception of India, and the quality of human material is growing. As for the suboptimal allocation of resources, this is only partly true. Projects in fundamental physics, for example, can only be realized with the help of the state. But the concern of the French is understandable. In the future, China will create such challenges to absolutely all countries of the world, which not everyone can cope with.