Europe's hard choices on China

Washington is escalating its campaign to contain China by blacklisting technology firms. It’s not clear if Europe is prepared to follow suit. Either way, there will be a price to pay.

It has been a year since US Vice President Mike Pence, speaking at the Hudson Institute in Washington, laid out the Trump administration’s case against China in unusually stark terms, triggering fears of a new Cold War. But across Europe, countries are still struggling to understand what this new world of “great power competition,” as it has come to be known within the Beltway, means for them—and there is nothing resembling a consensus on this crucial question.

Poland has cozied up to the United States. France dreams of strategic autonomy for Europe. Britain is consumed by Brexit chaos. And Germany seems to believe it can navigate this new landscape in the same way it did the old—looking out for its short-term economic interests without making hard choices or choosing a camp. The events of the past few months have shown that this approach is becoming increasingly untenable.

Beneath Donald Trump’s erratic, scandal-ridden presidency lurks a well-organized “whole of government” effort by senior officials within his administration to push back against China on many levels, and to nudge, coax, or pressure allies, if necessary, to join the US campaign.

This has been most obvious on the issue of 5G mobile networks, where Washington has mounted a forceful—if not entirely successful—campaign to convince its partners to reject Chinese suppliers like Huawei and ZTE. But the debate over 5G is just the beginning. Europe is likely to be confronted with a host of similarly difficult choices in the months and years to come. And it needs to think hard, at the national level and collectively, about where it wants to end up.

Black lists and surveillance

Earlier this month, the United States blacklisted 28 Chinese organizations, including Hikvision and Dahua Technology, two leading makers of video surveillance products. It accused them of being complicit in human rights abuses in Xinjiang, the western Chinese region where over a million Uighurs and other predominantly Muslim minorities have been detained in re-education camps.

Placing these organizations on the so-called entity list essentially bars US companies from selling them technology without the prior consent of the government. Whether the US move was motivated by altruistic concerns about human rights or a desire to raise pressure on China to make concessions in long-running trade talks is irrelevant. The move shines a spotlight on Europe’s slow-moving effort to revamp its own rules on the export of cyber surveillance technologies, raising pressure on the European Commission, the European Parliament, and member states to overcome their differences and clinch a deal.

In the coming months, the US Department of Commerce is expected to publish new rules limiting the export of emerging technologies, such as artificial intelligence, quantum computing, and 3-D printing, to China. These new policies could have profound implications for European governments and companies, potentially exposing them to extra-territorial US sanctions if they do not follow Washington’s lead. It is unclear whether Europe is prepared for this escalation, which will once again put it in a position of having to choose between the United States and China.

An impossible position

“No matter what European countries decide on 5G, there are bigger questions lurking around the corner,” Jan-Peter Kleinhans of the Stiftung Neue Verantwortung, a Berlin think tank focused on technology and society, told Berlin Policy Journal. “Hard choices are looming on artificial intelligence, the Internet of Things, and quantum computing, with China in similarly dominant positions.”

This will put countries like Germany, whose big manufacturers rely heavily on the Chinese market, and the United Kingdom, which post-Brexit will be keen to bolster its economic ties to China, in an impossible position. But if they think they can carry on with business as usual, as their current approach to 5G suggests, they are deluding themselves.

Washington’s threats to rein in intelligence sharing with allies if they allow Huawei into their 5G networks have been brushed off by some in Europe as Trumpian bluster. Perhaps there is an element of truth to that. But it would be wrong for European countries to believe they can continue down this path without eventually suffering a real backlash from Washington, regardless of whether Trump or a Democrat is sitting in the White House in 2021.

A speech given in September by US Assistant Secretary of State Christopher Ford offers important insight into the American approach. Ford, speaking to the US Defense Threat Reduction Agency in Fort Belvoir, Virginia, argued that a “concerted, system-wide effort to erase barriers between the military and civilian sectors of the Chinese economy” has rendered the traditional distinction between the two obsolete. From now on, he appeared to be saying, the US will be considering virtually all Chinese companies a national security threat.

Ford, who passed through Europe in early October with a delegation of officials from the Pentagon and the National Security Council, also spoke of a growing international consensus that the “non-Chinese world” needs to work more closely together to guard against Chinese abuses.

Behind the curve

Would European capitals agree? That is not entirely clear. Put simply, the US is arguing that the geo-economic threat from China requires responses on two different levels: first, defensive measures like investment screening and procurement policies that protect vital technology and critical infrastructure like 5G networks; and second, policies that ensure Western countries are not unwittingly contributing to Chinese military advances and human rights violations through exports, corporate R&D cooperation, or scientific collaboration. So far, Europe seems only partially on board with the first category and unconvinced, or at the very least well behind the curve, on the second.

After a year in which Europe adopted a tougher stance toward China, introducing its own investment screening mechanism, labeling China a “systemic rival,” and eliciting pledges from Beijing to open up its economy at an EU-China summit back in April, 2020 will be a crucial year in determining whether the pushback will continue.

If Beijing fails to deliver on its pledges from April 2019, will European capitals and the newly “geopolitical” European Commission have the will and wherewithal to muster a forceful response? And when Chancellor Angela Merkel says that she wants to make EU-China relations a focus of Germany’s EU presidency next year, as she did this month in a speech to parliament, is this a sign that she is serious about standing up to China, or an indication that she wants to preserve ties at all costs, heralding more division within Europe? Her readiness to give Huawei a role in the German 5G network due to fears of a Chinese backlash—a position parliamentarians in her own party are trying to overturn—suggests it may be the latter. Either way, Washington will be watching closely.

This article was first published by the Berlin Policy Journal on October 31, 2019.