2 February 2024

Ihe European Commission is in a hurry to propose an economic security strategy on June 20 which will make it possible to initiate a debate at the European Council at the end of June. It’s a paradigm shift for the 27 countries, which have built their single market on an open economy model. The international context requires it.

National security has become central in the economic policy of Xi Jinping as in that of Joe Biden for whom the world is at stake. “a turning point and the vital interests of the country are threatened”. Admittedly, Washington’s rhetoric has evolved. We are no longer talking about a decoupling of the American economy and the Chinese economy, which is as unrealistic as desired by American companies.

It is like the Europeans of “derisk” : reduce vulnerabilities related to excessive dependencies. But it is indeed a technological decoupling that began in October 2022 by cutting China off from American semiconductor manufacturing know-how.

The EU has its interests and constraints

This is to curb China’s capacity for innovation in the military sector, and this decoupling will extend to artificial intelligence, supercomputers and biotech, which are themselves power amplifiers for the country which is at the technological frontier.

An escalation of protectionist measures and economic coercion between the two powers would take third countries in a pincer movement by forcing them to choose one side or the other. While at the Hiroshima summit on May 30, the members of the G7 decided to coordinate to “more economic resilience and economic security”the Europeans intend to develop their own doctrine of “de-risking” so as not to content themselves with aligning themselves.

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The European Union has its own interests and specific constraints. It depends more on external demand than the United States. The ratio of exports to GDP was 8% for the United States in 2019 compared to 15% for the EU. It is also more integrated into the Chinese economy than the United States. Furthermore, security is a competence of the Member States. We must therefore clarify the objectives of the Europeans.

The risks of a more isolated and therefore more aggressive China

Washington and Brussels certainly agree on the assessment of the systemic risk represented by a China which intends to promote a new international order with Chinese characteristics. But Washington wants to preserve its technological and military leadership, where the Europeans have yet to decide whether they want to first strengthen the resilience of their supply chains or be more offensive vis-à-vis China.

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