China’s post-Covid 19 ‘techno-nationalist’ industrial policy

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By REBECCA ARCESATI and MARTIJN RASSER

China’s post-Covid 19 ‘techno-nationalist’ industrial policy

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While Covid-19 brings China one step closer to technology-perfected authoritarianism through improvised health apps and real-time surveillance, Europe is busy looking inward.

The pandemic has reignited self-reliance ambitions and given new impetus to concepts of digital and technological ‘sovereignty’.

There is a serious debate about re-shoring production from China, as the pandemic exposed the vulnerability of supply chains from pharmaceuticals to electronics.

The EU and member states are bracing for acquisitions of strategic assets like biotechnologies by tightening investment screening tools.

The pursuit of resilience should not result in isolationism.

But recently, some were advocating for bigger European ´champions´ to match China´s techno-nationalist industrial policy.

Transatlantic mistrust on digital matters also urges Europe to do things on its own, from developing a European cloud infrastructure to crafting rules on artificial intelligence (AI) and ensuring that Europeans have control over their data.

While the bloc’s resolve to be stronger in tech deserves praise, an inward-looking strategy is doomed to fail unless it is accompanied by proactive cooperation with like-minded countries.

In a paradox, the best way for Europe to ensure its tech independence is through collaboration with allies.

Europe cannot go it alone if it wants to preserve its technological edge, protect its security, and ensure a democratic technology future and a vibrant economy in the post-pandemic world.

Democratic alliances remain an unmatched source of European strength as it deals with a rising China.

Beijing’s ambitions to lead in technologies like AI, 5G, quantum computing, and genomics, if successful, would provide China with unprecedented economic, political, and military advantages.

This poses a threat to liberal democracy and would leave Europe’s quest for technological ‘sovereignty’ stillborn.

Economically, China’s plans to boost indigenous innovation through subsidies, protectionism, and the absorption of foreign technology threaten the competitiveness of countries playing by market rules.

Politically, Chinese tech firms implicated in human rights abuses in Xinjiang play leading roles in setting global standards for applications like facial recognition, empowering authoritarianism.

Built by CCP?

In the security sphere, reliance on Chinese Communist Party (CCP)-linked firms for the construction of critical information infrastructure is hardly conducive to any country´s technological autonomy – and brings mounting cybersecurity and strategic risks.

The EU and tech-leading member states – such as Germany, France, and the Netherlands – should join forces with like-minded countries.

Together with the United States, Canada, Japan, and South Korea among others, they should spearhead the creation of a new coordination body for multinational technology policy – a technology alliance.

This grouping would help preserve competitiveness and security by protecting critical technologies, strengthen collaborative innovation, and anchor emerging technology adoption and governance in democratic values and norms. These three lines of effort would be the foundation for a secure and prosperous Europe.

First, Europe’s long-term economic health is threatened by Beijing’s goals to wean itself off foreign technology in fields like aerospace, semiconductors, and robotics. EU member states should not let this be a fait accompli.

This does not mean cutting off China as a trade partner. It does require placing restrictions on certain exports and knowledge transfers to make sure China cannot indigenise the state-of-the-art.

Such controls, like for semiconductor manufacturing equipment, must be targeted and multilateral. Multinational coordination is also needed to share information on Chinese state-backed investments, or R&D partnerships with universities.

Second, investments must be made to maintain leadership in key fields. Breakthroughs in areas like 5G, quantum information science, and AI will have far-reaching economic impact, and profound effects on national and international security.

Launching joint civilian and defence R&D projects with like-minded partners is one way of securing continued technological advantage.

Another is to join forces on expensive efforts to restructure vital supply chains. The pandemic exposed the brittleness of Europe’s position.

Countries like Japan, which is subsidising manufacturers to move away from China, share this plight.

Resilience will require joint solutions – and create new opportunities and markets.

Finally, coordinating the deployment and governance of emerging technologies is front and centre at protecting the values that unite Europe.

China’s proliferation of surveillance technology – used for repression at home and increasingly exported – is a direct threat to democratic values; curbing it will require a coordinated response by the world’s leading democracies.

This same group should also reassert themselves in the world’s standards-setting bodies, like the UN´s ITU, that are increasingly targeted by Beijing to influence the make-up of the digital economy.

Europe stands at an inflection point.

Decisions its leaders make in coming months will set the course for its post-pandemic future. How they act to secure Europe’s technological viability will determine the continent’s economic, military, and political power for decades. Technological sovereignty will not flow from mimicking Chinese industrial policy.

Instead, Europeans should embrace their allies to build a tech future that is dynamic, innovative, and competitive.

Cooperation with tech-leading democracies is how to secure European tech sovereignty.

AUTHOR BIO

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Rebecca Arcesati is an analyst at the Mercator Institute for China Studies in Berlin. Martijn Rasser is a senior fellow of the technology and national security program at the Centre for a New American Security.

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