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The collective manuscript prepared by the European Think-tank Network on China*) unites authors from numerous EU and foreign states (the UK and China). The report analyses the China’s rise to a global digital technology’s power, as well as its effect on the European strategies in the digital transition and in shaping innovations. The report managed to sum-up a “nuanced picture” of the European-China’s interaction in digital and innovative technologies, and identified some complexities in approaches to growth patterns.
Background
The European Union’s dominating interest towards China reflects the country’s increasing role in science, research and digital technologies. It has become evident that China has made “major” or “very major” progress in AI in 2026, with serious achievements in semiconductors, bio- and green-technologies. However, China’s analytics were suspicious about the EU’s ability to reduce dependencies and “prosecute economic de-risking”, notes the report’s executive summary.
The report underlines that during last decade, the EU’s approach to China in science and technology has shifted from “unconditional openness” to “de-risking” economic and research security. Thus, the EU economic security strategy (2023) reflected some concerns: the EU was determined to reduce dependencies on China, in strategically relevant sectors and/or critical infrastructures. However, this view is not unanimously shared by all EU states: several countries still rely on national strategies in the “economic engagement with China”.
The EU and China tried to reduce tensions: i.e. the bilateral summit in 2025 (held on the 50th anniversary of mutual relations) produced a joint statement on climate change and the protection of the environment; but China wants to double its world-leading solar and wind capacities in the next decade. China will heavily invest in emerging sectors, such as quantum technology, hydrogen, nuclear fusion as well as brain-computer interfaces; e.g. in 2025, China created the Government Guidance Fund (GGF) to provide funding of about €127 billion to such technology fields as quantum computing, AI-based biotech and next-generation wireless networks.
*) Citations and reference: Fragmented Europe: Dealing with China as a technology and innovation power. Eds: B. Bartsch and C. Wessling. June 2026. – Report by the European Think-tank “Network on China” (ETNC). Web-link at: https://merics.org/sites/default/files/2026-06/MERICS%2BETNC_Report_2026_WEB.pdf
The main outcomes
The report’s collective team of authors produced a fascinating analysis of corresponding EU-China “dependency connections” and underlined their basic elements (pp. 29-191). Thus, although the EU states face similar issues with Chinese technologies dominance, separate states pursued different approaches. For example, the degree of exposure and engagement with China in tech and innovation often coincides with a country’s economic exposure to China writ large. Such countries as France, Germany, Italy and the United Kingdom the report counted “among the countries that are most affected by China’s rise in tech and innovation sectors”. For example, Austria, Belgium, Denmark, Finland, the Netherlands, Poland and Sweden can also be counted among the countries with a comparatively high degree of exposure to and engagement with China as a tech power; but their approaches to risk mitigation, however, differ considerably. Whereas, Hungary, Ireland, Portugal, Slovakia and Spain are regarded among the countries that prioritize cooperation.
But the digital competition is a world-wide phenomenon: i.e. over the next five years, technological in general and digital in particular withing the “triangle competitors” – the US, EU and China “is likely to intensify” (p. 21). As the US reassesses aspects of the liberal, rules-based order, regulatory gaps are emerging that China has the capacity and intent to occupy through standards-setting, supply chains, and overseas technological platforms EU-China innovation relations have turned more difficult in recent years.
Although government policies cannot undo deep inter-dependencies in science and business overnight, cooperation no longer goes uncontested. The exclusion of Chinese entities from large parts of the Horizon Europe funding program and capitals’ increased scrutiny of Chinese investments into high-tech sectors are just two examples of a wider transformation: from largely unconditional openness to China in science and technology, the EU’s approach has shifted towards a logic of “de-risking” and economic security.
The EU-China de-risking strategies
Once a partner in implementing important de-risking policies vis-à-vis China –sometimes by unilaterally pressuring Europeans to treat Chinese technology as a threat – the US is now undermining the EU and its ability to act in global technology competition. European governments may be excused for scrambling to respond in kind to Chinese export controls on critical inputs for their tech industries while the United States is coercing its allies.
Similarly, restricting Chinese ICT vendors or strengthening export controls may seem ill-timed as Washington is making concessions to Beijing on the technology front. Still, it seems fair to say that Trump’s policies are making it more complicated and costlier for Europe to reduce its strategic vulnerabilities, but they will not fundamentally change member states’ collective risk assessment on China.
Main EU challenges are in China’s techno-industrial system posing to the EU resilience, security and long-term competitiveness. PRC-origin technology looms large in each of the high-risk areas identified as needing the most urgent action – from Europe’s strategic import dependency for chips to the security and resilience of its energy grids. This assessment reflects a growing consensus among experts and analysts in and outside governments.
Sources: = European Commission (2026). “Horizon Europe.” https://research-and-innovation.ec.europa.eu/funding/funding-opportunities/funding-programmes-and-open-calls/horizon-europe_en. = Fieldhouse R. (2026). “Why Europe barred China from flagship Horizon re-search programs.”- Nature. In: https://www.nature.com/articles/d41586-026-00435-w
With some exceptions, the risks stemming from deep technological interdependence with China are arguably recognised by most EU governments. However, conversations with officials in Brussels reveal an acute preoccupation regarding the bloc’s resolve, urgency, and ability to act swiftly to counter China’s growing techno-industrial dominance.
Reference to the ETNC report, p.26, in: https://merics.org/sites/default/files/2026-06/MERICS%2BETNC_Report_2026_WEB.pdf
Perspectives
Since 2018, the EU states were deeply involved in the EU-wide digital de-risking approach, tightened research guidelines, restricting the use of Chinese-made 5G, drones and surveillance technology. At the same time, commercial interests and China’s growing edge in green technologies included some age-old engagement: e.g. Chinese firms now supply much of Denmark’s electric bus fleet, Chinese batteries are entering the power grid, and cooperation is expanding in areas such as green maritime technology and water management – despite the caution about Vestas’ loss of market position to its Chinese competitors. Looking ahead, as Denmark aligns more closely with Brussels than Washington, any shift toward renewed engagement is likely to remain limited as long as the EU maintains its de-risking strategy.
Reference to: https://www.diis.dk/en/research/on-the-receiving-how-denmark-handles-chinese-tech
The EU-27, as the report assess, “will have to face the fact that China will remain a force to be reckoned with in high tech and innovation”. Securing European stable and strong industrial base, investing in research and development will be crucial to remain competitive in high-tech and emerging sectors. To adapt to the growing competition from Chinese high-tech, Europe will need to closely monitor the implementation of its sectoral Five-Year Plans and respond accordingly: “as China’s leadership continues to project confidence in its policy of tech self-reliance, there can be no doubt that the challenge to Europe’s technological competitiveness will only intensify
in the coming years” (Report, p.14).
The outlook for the Europe and the EU member states in the EU-China cooperation is complex, as they find themselves in different social and politico-economic conditions: e.g. the “distrust in Chinese technology will stay, but with the transatlantic relationship challenged by the US’ shifting policies, the protecting European assets might prove challenging”.
In addition, notes the report, the ongoing crisis of the transatlantic relationship might undermine the EU’s ability to act in global technology competition, making the reduction of strategic vulnerabilities costlier for Europe. Thus, both sides are faced with important choices that will determine whether the two great regions “drift apart or move forward together”. The “inflection point” in EU-China relationship is not a moment of crisis, but of opportunity: the EU is ready to engage – with openness and pragmatism. But experts argue that “engagement must be reciprocal and it must deliver tangible benefits for people, economies and the planet”.
Source: E. Kiorri, E. Heinz. “Can the EU de-risk from China and make its trade relationship sustainable?” – Euronews. 6 February 2026. In: https://www.euronews.com/my-europe/2026/06/02/the-eu-says-its-trade-with-china-isnt-sustainable-what-does-de-risking-mean
Our opinion
China’s long-term strategy for economic development has been to remake the global order in ways that better reflect its own values. As competitive Chinese exports flood global markets, European economies face a critical threat.
With regards to China’s rise as a technological and science superpower, the EU-27 and European neighbors will have to keep addressing both risks and opportunities; and to carefully weigh them against one another based on sound and swift analysis.
China’s industrial strategy is increasingly complicated by its own domestic challenges. Today’s China is not just an economic titan but also a case study of decentralised authoritarianism gone wrong. Provinces and cities are now caught up in destructive, subsidised competition, and their finances are in severe deficit.
Meanwhile in Europe, a record-breaking heatwave this summer has prompted the UN’s climate chief to argue that stopping climate change requires a “faster shift to clean energy”: the question is how? It is vital to assess the extent to which the EU’s green transition is reliant on foreign direct investment; keeping in mind that de-carbonisation cannot be built through domestic firms and public subsidies alone.