【By Liu Bai, Observer News】
“Chinese companies have caught up with European competitors, and in some areas even surpassed them, putting the EU on the defensive.” On the occasion of the 50th anniversary of China-EU diplomatic relations, the Hong Kong English media South China Morning Post published an article on September 28, exploring how China has grown from a technological laggard to a global innovation power over the past half-century.
Analysts pointed out that in the field of technology, China has transformed from a student to a teacher for the EU. No one would question China's innovative capacity, but there are still areas where the EU can learn from China. Moreover, the technical and supply chain interdependence between China and the EU is high, making decoupling unrealistic. The future should pursue orderly competition and cooperation.
The article suggests that the EU should not blindly criticize China's industrial policies, but rather accelerate reforms and innovation, develop cutting-edge technologies, and learn from the strategies of technological powers like China. At the same time, it should enhance its competitiveness through attracting Chinese investment, technology transfer, and innovation ecosystem development, rather than relying solely on defensive measures.
On March 4, the Huawei Mate XT Ultimate Design smartphone was displayed at the MWC25 tech exhibition in Barcelona, Spain. Visual China
From "Student" to "Teacher": The Shift in Sino-European Technology Dynamics
The article mentioned that in the late 1970s, as China was about to launch reform and opening-up, a high-level delegation was sent to conduct a 36-day tour of Western Europe. They visited 25 cities in five countries, including France and Germany, and toured dozens of factories, mines, ports, farms, universities, and research institutions.
According to the findings of the visit, the Chinese delegation concluded that China was at least 20 years behind in science, technology, industry, and overall modernization.
This visit also pointed the way for China's development: the path to the next stage of economic development would be paved by science and technology, expanded trade, and economic system reform.
Fast forward to today, China has rid itself of dependence on Western technology in many fields and has risen to become an innovation power in the global value chain.
Now, as China and Europe celebrate the 50th anniversary of their diplomatic relations, Europe finds itself in a defensive posture, struggling to catch up, and bilateral relations are affected by trade frictions.
Analysts say that technological competition will only become more intense, but it doesn't have to be a zero-sum game. Some European companies are beginning to adopt China's "technology transfer" strategy, aiming to stand firm in the competition.
For decades, the "transaction" model between the two sides has been simple: China used market access as leverage to obtain Western technology from European companies.
Initially, the flow of technology was basically one-way. However, Ding Chun, Director of the Center for European Studies at Fudan University, pointed out that this flow began to reverse later.
"In the past, Europe was the teacher, and China was the student," said Ding Chun. "But now, in multiple areas, the student has surpassed the teacher. This shift has caused anxiety and concern among Europeans, which is understandable."
The article states that this shift in the balance of power began around 2001, when China joined the World Trade Organization, accelerating the opening up to foreign investment and forcing Chinese enterprises to accelerate their catch-up efforts.
Tim Rühlig, Senior Analyst at the EU Security Institute, pointed out that European companies seem to have underestimated the innovative capabilities of their Chinese counterparts.
"For a long time, they believed that China could only catch up by imitating Western technology. But now, no one would question China's innovative capacity," he said. "The complementarity between China and Europe has weakened, and instead, they are competing in similar niche markets. This is one of the reasons why Sino-European relations have become increasingly complex."
Rühlig said that the technology and innovation ecosystems of both sides are deeply intertwined through supply chains, forming a mutually complex relationship. "To understand the current situation, we must analyze it at a detailed level."
However, Ding Chun also pointed out that Europe still maintains an advantage in multiple areas, and China still has much to learn. European companies maintain advantages in high-end manufacturing, mechanical engineering, aerospace, robotics, precision instruments, industrial software, advanced semiconductor equipment, pharmaceuticals, nuclear technology, and basic sciences.
Ding Chun believes that as the United States restricts China's access to its own technological achievements, these European companies as "sources of technology" have become more important for China.
However, the pace of European innovation has slowed down, falling behind the rapid development of China and the United States.
"China has achieved rapid progress through learning, digestion, and innovation, while Europe's 'first-mover advantage' in traditional industries has turned into a relative disadvantage," he said.
Ding Chun said that Europe focuses too much on traditional industries such as automobiles, machinery, chemicals, and electronics, without giving sufficient attention to frontier technologies such as artificial intelligence and information technology. Meanwhile, China continues to advance in areas such as artificial intelligence, digital economy, telecommunications, renewable energy, photovoltaics, lithium batteries, electric vehicles, drones, quantum computing, and supercomputers.
The "Shanghai" China-Europe freight train carrying 90 BYD Dolphin electric cars heading to Germany. Visual China
Javier Borràs Arumí, researcher at the Barcelona International Affairs Center, a Spanish think tank, said that a sense of "Europe has missed opportunities and is left behind" is spreading within the EU.
"The current mainstream sentiment is pessimistic and stagnant," he said.
However, Alicia Garcia-Herrero, Chief Economist for Asia-Pacific at Natixis, believes that the core issue facing the EU is not "technology itself," but its reliance on China's highly developed industrial capacity.
"It is precisely the technology and industrial capacity embedded in industrial products that make it almost impossible for the EU to avoid China. Almost everything you buy contains Chinese components."
The EU claims that China has gained this industrial strength through state subsidies, creating an unfair competitive advantage, especially in the electric vehicle and photovoltaic industries, leading to overcapacity and exporting to other countries at prices below cost. However, China has repeatedly refuted this claim.
Borràs said that the EU's view of Chinese technology has largely shifted to "concern," fearing threats to its economy, security, and values.
"The EU's attitude toward Chinese technology is basically defensive; we need to protect ourselves from its influence. This is also influenced by pressure from the United States, such as requiring the ban of certain Chinese technologies."
Analysts point out that European businesses and policymakers have reacted too slowly, failing to recognize that China has become an innovative industrial power and failing to respond to the challenges in time.
"European business and political circles took years to realize that China had become a major competitor, not just a major customer," said Daniel Hamilton, Senior Research Fellow at the Institute for Foreign Policy Studies at Johns Hopkins University. "While Europe hesitated, China had already narrowed the gap."
Ding Chun said that competition will only become fiercer, and criticizing China's industrial policies will not help Europe catch up.
He believes that if Europe feels "surpassed by former students," the wise approach would be to accelerate reform and innovation rather than take defensive measures.
The EU's Defensive Stance and Breakthrough: Seeking a New Balance in Cooperation and Competition
In Borràs's view, the EU faces a "cooperation-competition dilemma," trying to find a balance between security and competitiveness.
"If we block certain Chinese technologies or companies, the EU will lose the price and efficiency advantages they provide, thereby harming its competitiveness."
"Prioritizing security or geopolitics inevitably comes at the cost of efficiency. This trade-off will not disappear."
He also pointed out that European technological development is constrained by institutional factors such as market fragmentation and the difficulty of scaling up domestic enterprises.
Alexander Brown, Senior Analyst at the Mercator Institute for China Studies in Germany, said that European governments should be more proactive.
"Especially in Germany, companies have always been successful, so there hasn't been a strong demand for government intervention. But when China adopts active industrial policies that create 'unfair competition,' the free market model struggles to cope."
Hamilton said that the EU still has room for maneuver because China's dependence on European strategic imports is twice that of Europe's dependence on China.
"Therefore, the EU can make itself more indispensable to China."
"The EU may become more active in using its toolbox, investigating Chinese companies with high subsidies, blocking Chinese investments if European companies are denied access to the Chinese market, and imposing tariffs on Chinese companies that use 'coercive strategies.'"
Ding Chun pointed out that since technology cannot be monopolized by one side and decoupling is unrealistic, China and Europe must continue to balance.
"Both sides have advantages in offense and defense. The focus should be on maintaining orderly competition and cooperation, rather than power confrontation."
Chuneng New Energy's Yichang base is producing energy storage orders for Bulgaria. Visual China
Borràs said that green technology is an opportunity for cooperation, and Europe can learn from Chinese technology companies investing in Europe.
"However, to truly benefit, we must reach technology transfer agreements with Chinese companies, while the government needs to build a sound innovation ecosystem to absorb innovation and achieve 'learning by doing' and spillover effects."
Borràs also added that the EU lacks a realistic understanding of its own technological strength and does not have the scale and capability to match the US and China.
He suggested that the EU should stop comparing itself with China and the US and instead learn from the strategies of medium-sized technological powers like South Korea and Japan. These countries adopt a "strategic specialization model," focusing on controlling key nodes in the technology value chain rather than trying to dominate entire industries.
Rühlig pointed out, "The key is not to decide whether the two sides are partners, competitors, or adversaries, but to explore how to cooperate with systemic opponents and what systemic competition means when cooperation is necessary."
Some European countries have already begun to utilize Chinese technological expertise. For example, Spain is attracting Chinese investment, hoping to learn from Chinese leading electric vehicle, battery, and green hydrogen companies.
Brown said that large companies in medical technology, advanced machinery, and pharmaceuticals still have confidence in maintaining their advantages through localization and "running faster" strategies, i.e., investing in China and using it as a source of innovation.
"But I'm not sure whether this strategy can work in the long term... because this inevitably leads to technology spillovers, helping China build its own capabilities."
"Overall, the EU remains open to Chinese investment. If this investment promotes the transfer of technology to Europe, it is exactly what the EU hopes to see. But the challenge lies in the fact that China also wants to maintain its own technological leadership."
Rühlig said that China needs to realize that the EU's highly open market is receiving a large amount of heavily subsidized Chinese technology exports, which threatens the competitiveness of European companies.
"If China and the EU cannot reach a consensus on this, I worry that the EU might close its market out of fear."
"The key is not to determine whether the two sides are partners, competitors, or adversaries, but to explore 'how to cooperate with systemic opponents' and 'what systemic competition means when you have to cooperate with the other party,' " Rühlig said.
Foreign Ministry Spokesperson Guo Jia Kun stated on July 21 during a regular press conference that over the past half-century, Sino-European relations have weathered storms and gradually matured, becoming one of the most influential bilateral relationships in the world. Sino-European cooperation has yielded fruitful results, providing strong support for each other's development and progress, bringing tangible benefits to nearly 200 million people in China and Europe, and making an important contribution to promoting world peace and development, setting a model for mutual benefit in the era of economic globalization. The annual trade volume between the two sides has grown from $2.4 billion to $785.8 billion, and the stock of mutual investment has increased from almost zero to nearly $260 billion, with increasing exchanges between people, and effective coordination and cooperation in areas such as responding to climate change. At the same time, Sino-European relations also face some challenges. Some people in Europe have continuously strengthened the "threefold positioning" of Sino-European relations, exaggerating specific trade and economic issues, and unreasonably accusing China on the Ukraine issue, causing unnecessary interference to Sino-European relations.
China expects the EU to move in the same direction as China, to view Sino-European relations with a comprehensive, dialectical, and developmental perspective, to deeply summarize the experiences and lessons learned from the past 50 years of Sino-European relations, to follow the trend of the times and the common expectations of the people of both sides and the international community, to reach consensus, transcend differences, jointly plan the next 50 years of cooperation, and work together to create a more promising future for the comprehensive strategic partnership between China and the EU.
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