Rosa Balfour, Noah Barkin, and Anu Bradford discuss whether Europe can compete with the United States and China.
Europe is stuck between the United States’ market-driven dynamism and China’s state-led industrial strategy.
Rosa Balfour, Noah Barkin, and Anu Bradford debate whether Europe can leverage its rulemaking power and emerging industrial agenda into genuine competitiveness.
Anu Bradford, Noah Barkin, May 27, 2026, “Can Europe Compete with the United States and China?,” Carnegie Europe.
Noah Barkin, January 6, 2026, "Watching China in Europe—January 2026," German Marshall Fund.
Noah Barkin, December 1, 2025, "As Europe Dithers, the Cost of Derisking from China Rises," Rhodium Group.
Noah Barkin, January 16, 2025, "Trump and the Europe-US-China Triangle," Rhodium Group.
Anu Bradford, 2023, "Digital Empires. The Global Battle to Regulate Technology," Oxford University Press.
Anu Bradford, 2023, "Europe’s Digital Constitution," Virginia Journal of International Law, Volume 64.
Anu Bradford, 2019, "The Brussels Effect. How the European Union Rules the World," Oxford University Press.
Rosa Balfour, February 8, 2026, "Dependence on the US is Deeply Rooted in the European Mindset," Le Monde.
Rosa Balfour, January 24, 2026, "The EU Finally Used an Economic Threat Against Trump. But the Markets Forced His Climbdown," The Guardian.
Rosa Balfour, April 30, 2025, "Europe Tried to Trump-Proof Itself. Now It’s Crafting a Plan B.," Emissary, Carnegie Endowment for International Peace.
This podcast episode has been produced in the framework of Carnegie’s Europe Head-to-Head project.
Rosa Balfour
Hello and welcome to Carnegie Europe's Europe Head-to-Head series. This is our fourth episode and today we are discussing the question, is Europe in danger of becoming a US or China colony? We're going to be looking at European vulnerabilities vis a vis the United States and China. We're going to ask questions as to whether we are heading to a G2, towards a G2 world, but also what Europe can do to navigate this difficult context. I cannot think of two better people to address this question. we start with Anu Bradford, who is a professor at Columbia University and also the author of the Brussels Effect. She's also coined this term which has become popular. the author of Digital Empires. And most recently she co produced a documentary together with Natalie Tocci on why Europe Matters that you can find on YouTube. we are then joined by Noah Barkin, who is based in Berlin, is a senior advisor at the Rhodium Group a visiting fellow at the German Marshall Fund and also the author of a Substack that I really recommend called China in Europe. So, Noah has been real China Watch and how China, China's policies towards Europe.
Rosa Balfour
First, I'd really like to ask our speakers today to address the question, is Europe in danger of becoming a U.S. or China colony? Anu, let me start with you.
Anu Bradford
So, it is obviously a very provocative question, Rosa, and it would be a big jump for me to go from writing a book saying that Europe is an empire to switch the narrative to say that Europe is actually a colony. So I think, though it is a question that we are forced to ask in today's era when we are very conscious of certain dependencies, vulnerabilities and that has really reshaped the conversations in Brussels for an understandable reason. Europeans are very obsessed with pursuing greater strategic autonomy, greater technological sovereignty. And that debate is really spurred by this fact that there are important vulnerabilities where the Europeans are too dependent on, for instance, American technology. So whether you talk about just the daily ways we engage on the platforms, the cloud, cloud services that our companies rely on, whether we talk about the payment systems, all those roads lead to America. And we were not too worried about those dependencies in the past. But right now, when the sort of political alignment with the United States and the various Geopolitical tensions that are really pitting the U.S. administrations against the European fundamental interests is causing the concern that maybe those dependencies will be weaponized against the Europeans. So I don't think that makes Europe a colony, but it makes Europe dangerously dependent on certain technologies, which is prone to limit Europe's own ability to shape its destiny and defend its values. Which is something that I think it's important to have the conversation and see how we can mitigate some of those vulnerabilities.
Rosa Balfour
Thank you very much, Anu. And I hope we'll be able to unpack those technological and financial vulnerabilities that you mentioned. But before we do that, I'd like to turn to Noah and ask from his perspective, looking at China and what China does in Europe, is Europe at risk of becoming a China colony?
Noah Barkin
Well, thanks, Rosa, and thanks for the invitation. Look, I certainly hope that Europe does not end up as a colony of the U.S. or of China. but I think what one can envision, and this is already happening, is one vis a vis China deindustrialization. As Chinese competitors seize market share from European manufacturers, that means a loss of jobs, a loss of know-how. Um we can envision rising dependencies. We've already seen over the past year our dependencies on Chinese critical raw materials, rare earths. We saw our dependencies on Chinese PPE, masks during the COVID crisis. and these dependencies right now are deepening. They're not getting less. Even though we're talking about de. Risking and diversification. With rising dependencies comes a loss of political autonomy. Europe's, um. Europe is forced to accept China's red lines as its own. This could have implications for our ability to respond, for example, to an invasion of Taiwan. Economic sanctions against China by Europe would be greeted by measures that could. Could essentially shut down production at our factories in Europe. so one can. It's not a big leap to envision this future because we're already seeing signs of this today.
Rosa Balfour
Well, thank you very much, Noah. And what I'd like to. I mean, there are a number of things that both of you have said that I think we should unpack a little bit. The first is the politics of it and the ways in which those dependencies are being weaponize and the use that both the U.S. And China have been making of those dependencies. The second is the degree of autonomy. Which sectors Europeans should invest upon. And what is striking from what both of you have said is that we have in tech and finance there's a certain artificial intelligence, there's a dependency which is very much, you know with respect to the United States. But on, on um industrial policy, green tech and exports, there's also a huge dependency with China. So in a way Europeans are asymmetrically dependent on these two major powers, which makes it very difficult to understand what the priorities should be. So shall we start looking at the sectors? Anu, I'm going to turn to you because you are the author of the Brussels Effect and of Digital empires, and you included the European digital empire in this because you've been working so much on regulation. but has regulation perhaps, has it been losing its edge because of weaponization?
Anu Bradford
So regulatory sovereignty is an aspect of sovereignty that is your ability to write your own laws that reflect your own values. And that has been very central for the Europeans. And it has also become a one dimension of power, a source of authority that the Europeans have been able to leverage to defend their own interests at home and abroad. But now we've entered the era where these regulations are no longer a technocratic exercise. They are not just laws that the Europeans are enacting without triggering a response from the Americans. So these laws have become politicized or even geopoliticized in today's environment. So we have the Trump administration very actively attacking in particular laws like the European privacy laws, the European laws on content moderation laws on competition or what we call antitrust, which the American narrative, that is promoted by the Trump White House is targeting unfairly American tech giants. And it's reflecting the European protectionism. There's also this line of argument whereby Europeans are exporting their cities censorship through regulations like the Digital Services act, forcing the American tech companies to moderate content in accordance with these values that don't reflect the American free speech commitments. So what I think is really new and something I could not predict at the time when I was writing about the Brussels effect and even the digital empires, how much this politicization of the agenda is now potentially eroding the European regulatory autonomy, partially because President Trump is now folding these regulations into the product trade and technology war. So the Europeans are now sent the message that if you don't leave our tech companies alone, you will face tariffs or even worse, you will see the withdrawal of security guarantees. So now the Europeans face the reality whereby they defend events of the regulatory authority comes with some potential consequences relating to the trade opportunities or then what I think is even much more severe threat is that what are the geopolitical, geostrategic, even military implications of these battles?
Rosa Balfour
Noah I'd like to turn to you and you know, as I said there are two dimensions. One is China, China's policies and positioning in Europe and the other is the sectoral dependency. Should we start with the sectoral dependencies? And I'm thinking in particular green tech. I mean there've been big debates in Europe as to whether the European Union and European countries should subsidize battery production or should they import them from China. How does it look given that you've been looking at examining what China's doing on this front. Are Europeans at risk of becoming dependent on China for everything relating to green clean tech and how does it look like from your perspective?
Noah Barkin
Well I think if we, if we break it down we have become wholly dependent on China for solar panels. Europe did have a thriving solar industry, uh if you go back 10 years or so but that I think now there is a recognition that it's not worth investing taxpayer money to rebuild uh this sector. Wind turbines is another area where China has a dominant position. But I think Europe is scrambling to hold on and to push back and to avoid an overdependence on China. We've seen for example big Chinese wind turbine manufacturer Ming Yang excluded recently from building a manufacturing facility in Scotland. Also in a number of other countries including Germany they've been pushed aside in favor of European alternatives. and then there's batteries, there's electric vehicles where China has a technological edge. And I think the approach has been with this new Industrial Accelerator act which includes some language on FDI conditioning. I think in a perfect world Europe would like to do what China did to Europe uh 20 years ago, which is force Chinese companies to invest, um to set up joint ventures to agree to technology sharing maybe a final Word on this. I think asking China to. Chinese companies to do this is going to be a real challenge because right now it's profitable for Chinese companies to export to Europe. So I think Europe is going to have to put up some trade barriers in order to convince Chinese companies to invest in Europe in significant uh amounts. So I think right now this aspiration of. Of pulling a reverse China on China is, you know, in theory it works, but in practice, it's going to be very difficult as long as Chinese companies can export profitably to. To Europe.
Rosa Balfour
So can I ask you Noah maybe just continuing on this because. There's a sectoral issue and then there's a political issue. And you know, to what extent is China willing to take issue with Europeans? There's just been U.S.-China summit where the outcome seemed to be that both sides seem to be wanting to stabilize the relationship after, you know, a year of a lot of uncertainty and rising stakes. Do you think China will be willing to try to stabilize a little bit the relationship with Europe as a consequence of this, take advantage of this sort of pause in hostilities with the U.S. and try to preserve and try to pursue this also on the European front? or is it more a world in which the U.S. And China decide how things ought to be and the rest have to follow?
Noah Barkin
Well, I think in Europe, and I've had many conversations with European policymakers over the past year who ask, you know, it wouldn't be hard for China to kind of lure us into their camp or pull us away from the U.S. given the substantial tensions in the transatlantic relationship you know, one can envision a kind of grand bargain on clean technologies where you know, Europe keeps its market open to China and China agrees to invest and share technology and create jobs in Europe. So in theory, this makes sense. But I think China's view on this has been you know, it's not in a position where it needs to give anything to Europe. It sees Europe as weak, sees Europe as divided. the message that Chinese officials have been giving European counterparts in recent months has been, your best friend is gone. it's Europe that needs to make the concessions to China. And we've seen a very aggressive, just in the past weeks and months very aggressive regulations being rolled out, two decrees on industrial supply chains and on extraterritorial Jurisdiction which are essentially saying if, if, if Europe de risks from China, then there will be retaliation for that, for that de risking that diversification. So China has taken the view that it is in an advantageous position vis-a-vis Europe. The transatlantic relationship is breaking down. it can force its will on Europe rather than viewing this as an opportunity to lure Europe to its side with any, any sort of concessions.
Rosa Balfour
I do want to move to a slightly more positive framing about what Europe can do. But before I do that I'd just like to go back to Anu because there's one issue that I think is important and I'd like to hear your views. I think Europeans were kind of caught wrong footed at the U.S. administration's willingness to lump together questions of you know, security and defense with questions on tech regulation, with questions of trade which Europeans had really addressed in, in silos. And that's how things were. I mean you have you know, trade problems, you have the WTO and you have NATO for security, whereas with, with the current U.S. administration, this has all been fused into a single issue. How do you think an organization like the European Union can make can turn this sort of or how do you think it can handle these matters diplomatically and what does it need to do institutionally in order to be able to make those linkages across policy dossiers?
Anu Bradford
Yes, I think it is a really important question. Rosa and I, like Luuk van Middelaar has proposed this idea and there may be others who've being part of this conversation, having the kind of economic Security Council a little bit modeling the American National Security Council, where you try to get past these silos and where you have the highest level decision makers, including institutions like the Commission in charge of trade, in charge of defense and national security in charge of technological regulation and sovereignty, meet together to make sure that Europeans have a more holistic strategy, strategy that accounts for these dependencies so that the Europeans are much better prepared to respond to that attacks where all these policy domains are fused, as you say. And that's I think something that the Europeans have had the luxury to sort of not link these issues in the past and try to pursue the best possible policies in isolation in each of these fields. But right now, as you said, I don't think we're going back to this idea where we can separate national security from economic security from the product at a trade agenda because all of this is part of the weaponization agenda. And I don't think we going back to the world where we were able to delink these issues successfully. So I think some of that institutional mechanism, you link it in the Brussels level at the Commission, but also then make sure that you have the other institutions like the Council where we do have a better integration of the decision making across these key strategic sectors.
Rosa Balfour
Because if you think about it, I mean we've been talking about Europe's dependencies and its vulnerabilities and you know, the dangers of becoming, losing political autonomy. But you could also flip all this and think about the link, the interlocking strengths that Europeans have. So I'd like you perhaps to elaborate both, and I'll start with Anu. What can be done to turn what we have been describing as vulnerabilities, what the general narrative about Europe is describing as vulnerabilities. What can be done to turn them into strengths. I mean we keep on talking about Europe being one of the, a third block how can it make better use of its economic power, its regulatory power and the fact that as a market Europe is indispensable also to the United States and China. I mean you know we, we do these exercises of imagining, you know, Europe without either as a colony of the U.S. or China or without products manufacturing or technology from the U.S. but what about, how would the U.S. manage without the Europe as a market?
Anu Bradford
Yes, I think the first is that we need a bit of a mental switch that goes from this idea that we are weak to really that let's not just play defense. We also have tremendous strengths, understand the importance of our market. The exactly what you say. the American companies rely on having access to this market. For many of these tech giants, it's 20, 25% of their revenue. They have no interest in coercing Europe or losing that market or losing the trust of the Europeans in the reliability of those services. So I think that's one, I think the second is that we tried the capitulation, the submission strategy and that is not working. So again part of this idea that we need to approach this from the position of strength because if we show the Trump administration that coercion works, bullying works, that then becomes the strategy, the path that we will follow. So one set of demands will lead to a next set of demands. So that is certainly not a sustainable strategy. And then there's this idea that if Europeans are vulnerable. That Europeans cannot be technologically sovereign in many ways. Neither can the U.S. neither can China. There is not a single nation who can repatriate the entire AI stack, the complex supply chain, for instance of semiconductors to their own shores. So there are important the points that the Europeans could weaponize in that linked supply chain. ASML is a really powerful European company that is an essential supplier of the machines, the lithography machines that make these high-end chips. So there are dependencies that go both ways. And in that sense this idea of the complete technological sovereignty is an illusion. We already talked about Noah mentioned China's ability to hold Americans hostage by not providing the key rare earths the raw materials. So there is every player needs to still find a way to interact with one another. So I don't think Europeans are in a position to disengage. The Chinese know the Americans. So there needs to be a way to, to continue to engage with the administration and with those companies. But I think also the idea that there's more to the world than these two giants that we talk now a lot about the middle powers I think there's a little bit of question, who is the middle power? Is the European. Can you say that European Union is the middle power, but there are many other partners that the Europeans can very productively work with that could continue to want to engage in collaboration that continue to face similar dependencies and don't want to in a G2 world. So working with other techno democracies that share our challenges but also importantly share our values. And here obviously the EU needs to work very closely with the uk, with the Canadians, with Koreans, with Japanese, with Australians, with New Zealanders. And some of those vulnerabilities become less fatal if we find a way to then rely on these trusted networks and offer our technology to them, but also then be able to rely on many strengths including then materials technologies that these middle powers have. So the Europeans we often, we talked about how trade is used as one point of coercion. The US is only 13% of European Union, 87% is with the rest of the world. And the rest of the world, much of it wants to continue to trade and needs to continue to trade. So in that sense I think the Europeans need to understand that there are only so many concessions we need to make because we cannot afford not to trade with the U.S. there's a lot of the rest of the world that the Europeans can continue to use the diplomatic Channels use the sort of actively seek partnerships and I've been very encouraged to see that we finally move forward with the trade agreement with Mermaid. we've been deepening the trade ties with markets like India and I think that is exactly a central part of the strategy. So at the same time we trying to build our own technological capabilities, we need to deepen those partnerships in different parts of the world.
Rosa Balfour
Thanks Anu. It's the kind of the world minus 1m. But Noah let me turn to you because Anu said something very interesting about you know no states can be truly, can have true, true technological sovereignty. But isn't China trying to seek self sufficiency?
Noah Barkin
China is trying to seek self sufficiency. It's had success but it's also struggled in certain areas. I mean there is no solution for a Chinese solution for asml. In semiconductors China has invested billions and billions of dollars in trying to build up its own semiconductor manufacturing ecosystem. It has some big players in this, in this field but it has not been able to do this. Aerospace is another one where you know Chinese airlines uh rely on jet engines from the U.S. and Europe. So there are areas where China has made a push and not been successful. I think I agree with Anu. It's very similar to the U.S. I think we tend in Europe with regard to China to talk ourselves down, play down uh our leverage. we tend to see China as this 800-pound gorilla that is dominating has become a manufacturing powerhouse and that it's very hard to push back against. I think just as with the U.S. we do have a lot of leverage. The single market is China needs this market. China it has very weak uh domestic demand, has big structural problems. It relies on the rest of the world to buy its goods. to give you some figures, roughly a third of global manufacturing is coming from China right now. by the end of the decade that is expected to rise to close to 50%. Um but China only represents about 13% of of global demand. So it depends on Europe. The U.S. market is closing down to China and so Europe has this leverage but we're not great at using our leverage, uh and it's not easy with 27 countries coming together. So I think we also have to think about changing the way that the EU works. I'm not sure the EU which was a great peace project is you know, is the perfect project as it is now structured for this more geopolitical environment that we're in. So that is not something that nobody wants to reopen the Lisbon Treaty and spend years debating about this. But I think we do need to become more nimble we need to make decisions faster. so we need to change the way the EU operates in order to compete in this more geopolitical world.
Anu Bradford
And can I add here, we also have some tools already in place, including the famous anti coercion instruments. So we foresaw that this kind of instrument may be needed, that there are foreign powers that are going to coerce Europe into economic policies that are not aligned with its interests. And but we've been hesitant to use those more assertive tools. So we could prevent the entry of some of the American companies, for instance to our markets. We could decide not to respect some of the IP rights of this. These are really powerful tools how we are leveraging then the single market. But I think there's been certain hesitation. The Europeans instinct is not to escalate even in the instances which are almost like tailor made for where this instrument was designed to be used. So that's also part of that where I started the conversation with that kind of mental switch that we need to embrace the language of power in the world where power is the currency and be prepared to use the strategies that are also tools of escalation in the world where the others are escalating their strategies towards Europe.
Rosa Balfour
So we started this conversation recognizing that this is a zero-sum world in which certain powers are really pursuing their goals in a very transactional way. We started by you know, going through the various vulnerabilities on the European side, but then also talking about flipping the script. Right. So Europeans taking a different position vis-a-vis these dynamics being able to better to identify a better form of political leadership in order to activate those tools, many of which actually already exist, and working on making better linkages between economics and politics and security etc. Before I turn to those questions, I would like to ask you what do you think Europeans should do? I mean, if they were to make a bet on two or three areas through which Europe could make itself the indispensable partner, the sine qua non partner you know, without having necessarily the ambition of behaving like China or the United States or behaving in a certain way in the international the context. Because well, I would, I would continue to argue that there is a lot to say about being a cooperative international actor. And I think Europe has invested a lot on positioning itself in that sense in the multilateral world etc, so it should continue investing on that legacy. But nonetheless what can it do in order to make itself uh you know, an indispensable partner or, or, or, or a partner that is protected from, from a certain kind of weaponization. Are there two or three areas where Europeans ought to really invest in and maybe I can start with you.
Anu Bradford
Well, I think one thing Europeans need to draw a distinction. What are the kind of essential technologies where those vulnerabilities are most severe and most costly? And I think there are many American technology necessary for the Europeans. So Europeans don't need ultimately access to X. I am not sure that is making European, the quality of European life better. But then there are domains like defense technologies that are absolutely critical for the Europeans to be able to defend the continent. So I think those are the domains where we need to start setting priorities. Is that where do we build our technological sovereignty? Where do we then leverage the partnerships? Where do we think about having the kind of capacity building or technology transfer where the Europeans are trying to use all the positive tools, both play defense and offense. Very screwy, very you know, particularly strategic and successful in thinking about those and building the partnership. So I think that's one I mean right now everybody is talking about obviously AI and AI is the foundational technology. And we need to think about the entire complexity of the AI stack. So what the Europeans ought to be doing. So I think there's been a little bit too much focus on the model uh layer. And Europeans are not necessarily most competitive in trying to replicate the kind of American let's build energy intensive, capital-intensive models and be sovereign there, but really try to replicate China when it comes to let's be really successful on the application layer. And how do we win the game of making AI uh useful in our societies? So how do we maximize the benefits and harness what AI can do to our societies while mitigating also then the downsides. And I think that's where Europe has no inherent structural disadvantage. Europe has many very important industrial sectors where if we adopt AI we can play to our strengths. and I think that's some we talk about embodied AI, physical AI and I think that's something where the Europeans can also build a lot of the expertise. And then the more Europeans gain the foothold, we also have then certain sectors where we become the indispensable partner. We become the market that is leading, both as a supplier, but also the demand structures around it. And I think that creates points of leverage. It creates creates opportunities for partnership. And those are the domains where the Europeans don't then need to approach the conversations or strategic decisions from the point of weakness, but really from the position of strength. So I think that would be one way I would at least start the conversation.
Rosa Balfour
And Anu, Noah I will turn to you in a moment. But Anu, given that you coined the Brussels effect, if you were to write that book now, how would you. This is like a billion dollar question. I realized that. But how would you reframe it? I mean, the importance of regulation. You know, up until recently, Europeans were still talking about how GDPR worked, but now even Mario Draghi said we need to pause down AI regulation. How do you, how do you think, how do you see that at the moment? Is this moment for pausing regulation, or is it a moment for doubling down or perhaps taking a leap ahead and thinking about what regulations will be required in the future?
Anu Bradford
So I think those regulations are important way to institutionalize European values and shape the digital society, the green transformation of our society in ways that our citizens want. And I continue to defend those regulations. It doesn't mean that we should not take a close look to see if there's a way to simplify them, make them work better. But the kind of fundamental misconception that there seems to be that Europeans are facing a choice. Either we continue to regulate technology or we continue to generate technologies, develop technologies. To me, that is a very false dichotomy that is now I think, driving the narrative in Brussels too. I am absolutely committed to this idea that the Europeans need to put the competitiveness at the right and center. There is no security without prosperity, and there's no prosperity without competitive tech sector. And you don't only get there by regulating these technologies. That's absolutely 100% certain. But the idea that somehow European competitiveness or path to that competitiveness would run through deregulation to me, is not a particularly productive one. I think we need to understand what is the real reason that is holding the European tech sector back, and that is not the regulations like the gdpr. Even if we dismantle the AI act today, my prediction is that those AI companies would not emanate in great numbers from Europe in five years from now. Instead, I think we need to understand what is the reason we have this perceived innovation gap between the US and the eu. So the Americans have built these fundamental pillars of a thriving tech ecosystem that the Europeans have not. Most importantly, we don't have a digital single market. We still have fragmented marketplace. So it's hard for European tech companies to scale across 27 different regulations. So again, one AI act is much better than 27 different AI Acts. Second, we need to really build robust integrated capital markets union or savings and investment union as it has been relabeled, but really move to executing that so that the European companies can fund their growth and scaling in Europe. Third, we need to rethink our legal and cultural barriers to risk taking. Europeans have very punitive bankruptcy laws. If you really want our entrepreneurs to integrate at the edge of the technological frontier, it's hard and you will sometimes fail, but you need to be able to incentivize to do that kind of innovation, which means you also need to be given a second chance. And I think fourth, and this is a real opportunity for Europe, Rosa, is that the reason Americans have been so tremendously successful in this space is that Americans have been able to attract the global talent to innovate for the US and the Europeans have not been able to replicate that. So it's again, not the story of the GDPR holding us back, but the story that the tech entrepreneurs, the data scientists, all those, they have chosen America over Europe. But here lies the opportunity. America is now very busy because of this administration in dismantling that very strength of the tech ecosystem. No longer welcoming the immigrants through our universities that is often a gateway for their talent to flow to the US and the Europeans should be the ones who are now rolling out the red carpet and offering a path for those immigrants to come and innovate in Europe, for Europe, and enhance then the technological capabilities of Europe. So to me, this idea that the Brussels effect would somehow been the reason that the Europeans have been so focused and maybe complacent in thinking about just regulation. We need to address the right problem. So not dismantling those regulations, which I think even right now there's a massive backlash on AI in the US because people no longer trust that this technology is being developed in the way that serves the society. And regulation can create the kind of trust of how these technologies govern how we are disseminating the benefits of this technology. And that is a basis for innovation. So my recipe for Europeans is that they continue to defend the regulations that have served Europe well, that I believe also serve the world generally well, but then also not failing to rebuild these other pillars of a tech ecosystem that is absolutely central for Europe's competitiveness.
Rosa Balfour
Also going back to the points that you made earlier a human centric technological environment that is regulated, putting human rights at the center of it, I think is attractive well beyond Europe, but also in the rest of the world. Noah I'd like to turn to you now and ask I guess the same questions, what is it that can be done in order to reduce those dependencies from China. And Anu spoke about the you know, the tech environment and the need for a competitiveness agenda. If you think about the competitiveness agenda in the European Union vis-a-vis China and way in which China and Europe are interdependent, what would you focus on?
Noah Barkin
Well, I mean, there are some immediate things to focus on, like our dependency on China in critical raw materials, rare earths. this is something that you know, the Commission presented a strategy for at the end of last year, resource EU. There's also a discussion at G7 level. there's a discussion that the U.S. is driving, the U.S. administration is driving on this. so I think this is an immediate area where dependencies exist, where coercion has already happened and where we need to move very very fast. but there are other areas. Pharmaceutical ingredients is another, I think vulnerability longer term that we need to think about the next period case showed that we have a vulnerability in terms of um chip packaging, which is largely done in China. so there are. And this doesn't mean doing everything in Europe. It means just diversifying and having other options. And you know, the Commission has come out with its economic security communication which sort of defines the goals along three pillars. Protect, promote and partner. I think on the partner side we've done a good job. You know, we've seen a diversification of partnerships. The EU-India trade deal, EU-Mercosur EU-Australia. A number of other deals are in the works in Southeast Asia. I think on the promote side there's still a lot of work to do. We talked about the, you know, the Draghi Report at the completion of the single market making it easier for companies to innovate, for entrepreneurs to take risks creating a business environment in Europe where companies can thrive and where the capital is also there to help them scale up. and then on the protect side, and I think this is probably the most controversial side in Europe because we have a lot of free trading nations. I'm based in Germany I think if you go to Scandinavia, the Netherlands, these are not countries that have traditionally embraced tariffs and protectionism. But I think in order to ensure fair trade, we have to make sure that we're pushing back against unfair trade. Right. And that will, in certain sectors mean protecting industry. And you know, it can't just be about protecting industry. We have to do the promote and the, and the partner at the same time. we have to use the time that is afforded to us with tariffs that protect a certain industry to innovate and to move forward. Um but yes, I think it's a whole combination of things and a lot of it is not, you know, has nothing to do with China itself. It's about us getting our own house in order.
Rosa Balfour
Noah actually, can I ask you a follow up question on this matter? Because you've talked about, you know, the challenge of getting our house in order in Europe. and also China has had policies towards Europe that have targeted individual member states, trying to build out those dependencies and trying to make sure that no country was equally dependent on China.
Noah Barkin
So you have different, you know, some are dependent on China because of China is their export market. Other European countries are dependent on China because that's the major source of foreign direct investment. So then in 2019, so that's several years ago, the commission came out with this document saying, well, actually China is simultaneously a partner, a rival and a competitor. And the question is to what extent do you feel that or do you see that European individual countries are converging around a more unified position or not? Because of course the optics often are not that good, especially with the diplomatically. There are a lot of trips that are taken to go to Beijing with executives from the private sector in tow. and so I think the perception from Beijing is that actually Europeans continue to be divided. My perception in Brussels is that actually over the past five or six years they have come a little bit closer together, at least in the analysis of what the problem is. What do you think?
I mean, I think we have you know, we have been moving in the right direction. I think you still have big you know, different views within Europe. 27 member states. You're never going to have perfect harmony. I think you know, you have France which has shifted from more of an opportunistic approach with China to probably the most vocal hardline approach in Europe. France was a driving force behind the duties that the commission put on Chinese electric vehicle imports a little over a year ago. and then you have some sort of, I would say more quiet hardliners. And I would put the Netherlands, I would put Belgium. The Belgian Prime Minister last, last month wrote a letter to European Commission President Ursula von der Leyen calling for a much tougher economic approach with China. Talked about overcapacities, talked about the risks of dependencies. on the other side of the spectrum you have Spain, which has been very opportunistic in seeking Chinese investment. Pedro Sanchez has been in China four times in the past a little over three years. I mean, I, I think Germany is the key. Germany has the biggest, obviously the biggest economy in Europe. Germany has the deepest economic relationship traditionally with Europe with China. And, and, and Germany is also, I, I think in the eye of this China shock storm that Europe is experiencing because Germany is a manufacturing based economy. It is feeling the pain from China's competitive, growing competitiveness in manufacturing. so I think I remember Jens Escalant, who's the head of the European Chamber of Commerce in China. He was in Berlin a couple months ago and said, we're always talking about the lack of European consensus on China. but if Germany got its house in order if it sorted itself out, then I don't think we would have a problem. So I think it all starts in Germany just because of uh how close this economic relationship has been in the past. Germany is in the eye of the storm when it comes to the China shock. and so I think it's about a core group of countries coming together. Germany, France, Netherlands, Poland, Italy and developing a way forward. I think the commission has been doing the heavy lifting on China for a number of years. I do think we need to see more leadership from the member states.
Rosa Balfour
In this whole debate about, you know, great power rivalry and you know, how the world is evolving Europeans Sometimes feel that they're being left out. Right. and that, you know, these other great powers are playing these games that Europeans are not capable of playing. But of course, you know, 100 years ago Europeans were playing these big games. And so perhaps there's a little bit of you know, a sense of being left out. Is that a risk? You know, and the. The question is also pointing at the U.S.-China summit. recent summit when all the business executives from the U.S. were in China. I mean, you know, is this idea that, you know, they're going to they're making the pie and they're going to eat the pie and leave crumbs for the rest of the world. How does it look like from your perspective?
Anu Bradford
Well, I think there have been a lot of global conflicts where Europeans have had to concede that they are often watching from the sidelines and not actively shaping this. So when it came, for instance, to Israel, Gaza or right now, what is happening in Iran, the Europeans are not at the heart of this. At the same time, I think the Europeans were right not to be dragged into the center of the U.S. Israel war with Iran. So I think the Europeans also, in part, are asserting themselves by deciding to sit out that conflict and not sending troops to open the strait and so forth. But I think there is the sense that you would need to be, at least when you want, at the center of those conversations, those conflicts and making the critical decisions. And I think that's something that only a geopolitically, more united Europe can accomplish that if the Europeans are more. And we still don't have exactly a common European sort of defense. we don't have a common European geopolitical position in all those issues. So the fragmentation is then reducing the collective impact that the Europeans are having on the world stage. And I think, especially right now when, um. Some of the really kind of critical European values, uh. Um. on the decline, including then democracy and where the Europeans cannot anymore trust that the world is being shaped towards those values by players like the United States. That would really, I think be a call for the Europeans to step up and be the leader of the free world and be the one that is promoting those values and those institutions the same way promoting still international cooperation, promoting diplomacy, a peaceful way to solve disputes. And so I think there's a lot of demand because there's a vacuum in some areas where the Americans have retreated. So the Americans are exercising power in certain domains and certain parts of the world. And I think that leaves certain parts and issues and regions ungoverned. And that would be an obvious call for creator European leadership. and I think that's something that a more purposeful, more strategic, more integrated Europe can together accomplish.
Rosa Balfour
And Noah, I'd like to ask you the same question, but with a little addition. you know, Anu was referring to the vacuum left by the United States in certain areas. I don't see the signs of China wanting to step up to fill in certain vacuums, even though I see China wanting to be more influential in others. Where does China stand in all this? How does it see the sort of global distribution of power and responsibility?
Noah Barkin
Well, I don't think we've seen any indication from China that it is willing or able to sort of fill the, the gap that the US uh is, is now I guess creating you know, the role that the U.S. played in the, in the post-World War II world you know, you see, you see China's response to the war in Iran, you see China's response to the Israel-Gaza conflict, um you see its response to what the U.S. did in Venezuela. it's, it's not, you know, we get peace plans from China, which are a list of Chinese priorities, but we haven't seen China really investing, being willing to invest political capital in bringing countries together, in reaching agreements between countries. This is not something that has been a tradition in China. And I don't think we can expect the Chinese government to put its skin in the game to resolve global conflicts. I think we're moving to a world where you know, it will be more multipolar you know, the US is clearly pulling back and China will fill the gap in some areas. But I don't think China will be playing the role that the U.S. did you know, in the second half of the 20th century, for example.
Rosa Balfour
Well, thank you very much. We started by asking the question whether Europe was in danger of becoming a U.S. or China colony. I think we came to the conclusion that even though there are vulnerabilities there still is a lot of space for Europe to do things differently. Working with partners across the European continent like-minded countries globally reaching out to partners, you know, through trade and through other types of partnership again, globally. So there's plenty of space. But it does require putting the house in order. As one of our speakers put it during this conversation. Anu, Noah I'd like to thank you for joining us today. This was a great discussion. and I look forward to continuing more discussions with Carnegie Europe. Thank you very much.
Anu Bradford: Thanks for having us, Rosa.
Noah Barkin: Thanks, Rosa.