Valoli Aad Vredenbregt

Aad Vredenbregt owns and runs Valoli.

5 October

Taking a cue from the current energy crisis, Europe must limit its geopolitical dependencies, argues Aad Vredenbregt.

Our green and digital revolutions depend on indispensable raw materials such as cobalt and lithium. In the global hunt for those raw materials, China has succeeded in maneuvering itself into pole position almost unnoticed. China manages its own raw materials with strict licensing systems, and for the raw materials it doesn’t possess, it controls sources and critical supply routes, particularly in Africa.

Meanwhile, the Chinese are eagerly looking to acquire Western technological know-how to put those raw materials to good use. And they also develop know-how of their own. The registration and renewal of IP rights, especially trademarks, serve as an indicator of business activity in certain countries. And those figures show a structural shift. The authoritative Intellectual Property Indicators Report analyzes IP activity around the world and finds that offices in Asia received nearly 70 percent of all patent applications filed worldwide in 2020 (North America 20 percent, Europe about 10 percent). That’s a clear indication that technical and economic power is shifting toward Asian countries, China in particular.

For now, it’s unclear what the consequences of this shift will be, particularly in the economic and political domain. The Western-formed world order, international institutions, international law and underlying values and norms all reflect Western views and serve only Western interests, according to the Chinese. For example, they find such norms as individual human rights incompatible with their collective culture.

The Chinese economy, traditionally based on manufacturing, is rapidly transforming into a modern services economy and continues to grow, albeit at a lower level than before. China will surpass the US as the largest economy in the world before 2030 and will continue to monetize its technological progress into economic prosperity.

The rising Chinese prosperity is increasingly impacting Europe, in particular through strategic investments in infrastructure, high-tech companies, academia and research institutions. Intelligence agencies warn of Chinese espionage and influence. China has one of the largest hacker communities in the world. According to the FBI, the country is “the greatest threat to our economic and national security.” Not to mention the plight of the Taiwanese industry.

Research platform Follow the Money reports that 400 Dutch university research projects with possible military applications have been conducted in collaboration with Chinese universities that have direct ties to the Chinese military. These include studies on artificial intelligence and robotics, for example. Back in 2016, the IMF noted that Chinese influence is a threat to the global economy, especially Europe.

China is an almost indispensable trading partner for many countries, not only as an exporter of components but increasingly also as an outlet. Emerging economies in the region take more inspiration from China’s success than from the Western model of free-market economics and democracy.

China is – partly because of the strained relationship with the US – working hard to gain independence and superiority in materials and technology. This is especially the case with Beijing’s ambition to produce advanced chips and secure dominance over that strategic technology. Control over that industry will not only shape the future of the global economy, think quantum computing, but is also fundamental to military power. For example, China, under pressure from the US, has been denied access to the latest EUV lithography machines of ASML.

The world order is changing and the West can’t do without China in dealing with global problems such as the climate crisis and pandemics. Collaboration is therefore necessary, but we must avoid becoming too dependent on China in terms of raw materials and technology. We should learn from the current energy crisis that we ought to limit our geopolitical dependencies. To do so, Europe has to be more ambitious and decisive. ASML is seen as the crown jewel of the European chip industry and as essential for the ambitions laid down in the EU Chips Act, so we can start in the Netherlands.