What Display Daily thinks: The EU’s position underlies the ambitions of the US government to squeeze the Chinese tech sector. Without full support and implementation of curbs by its allies, the US risks exasperating an already difficult situation, and China’s capacity for retaliatory measures has bigger implications for other countries that have invested heavily in their relationships with China’s manufacturing sector.
This just continues to confirm how we see the situation: it will spur China’s manufacturers to adapt, and grow stronger, even if it means that its manufacturers have to move supply chains to other countries. However, as a Financial Times analysis of Foxconn’s investments in India show, it is no easy feat for Chinese companies to create new regional alliances.
Whatever the intentions of the US governments policies on China, the display industry doesn’t seem to have as much to worry about as originally thought.
The EU Cautious on US China Bans
The European Union (EU) has indicated that it will not immediately follow the United States’ lead in imposing outright bans on investment in China’s cutting-edge technology sector. Instead, the EU intends to formulate its own proposal by the end of the year. This response comes after President Joe Biden issued an executive order restricting US investment into China’s quantum computing, advanced chips, and artificial intelligence sectors, citing significant national security risks. The EU is in close contact with the US but has chosen not to enact similar measures right away.
In June, the European Commission revealed plans to introduce proposals by year-end to mitigate potential security risks from outbound investments. Member states like Germany and France have expressed reservations about adopting such measures due to the extensive economic interdependence between Europe and China, unlike the US. The EU’s goal is to prevent specific technological advancements that could enhance military capabilities and potentially undermine international peace and security.
Trade tensions have escalated due to concerns about Chinese access to crucial defense and digital technologies, as well as its dominance in vital supply chains for green initiatives. However, the EU has taken a more cautious approach compared to the US, seeking to “de-risk” rather than impose outright bans to avoid unintended repercussions in financial markets. France and Germany are trying to balance economic ties with China while addressing technological concerns.
Germany’s economy ministry expressed its intention to actively engage in the EU discussion on the appropriate approach. Berlin is dedicated to coordinating with allies to prevent advanced technologies from bolstering China’s military capabilities. However, the German government struggles to find a unified stance due to differences between cautious voices and more assertive approaches.
France has pursued economic ties with China, with President Emmanuel Macron leading high-profile deals, while also working to reduce dependencies in strategic industries. The EU’s trade chief, Valdis Dombrovskis, emphasized that any measures would be narrowly focused on products of specific national security concern to maintain good relations with Beijing.
Brussels has been developing ways to restrict the flow of technology to China, including stronger export controls. However, the EU faces challenges due to its substantial trade relationship with China. The situation underscores China’s readiness to respond to perceived technological bullying, as evident from its past reactions on semiconductor technology.
