By Diplomatic Council member Karlheinz Zuerl*

Current study by the European Parliamentary Research Service (EPRS) counteracts the EU's "de-risking" strategy towards China

China is about to overtake the European Union in clean energy. According to a recent study by the European Parliamentary Research Service (EPRS) entitled "EU-China: European expert consultation on future relations with China", China is leading the European Union in peer-reviewed publications in the fields of solar and wind energy, lithium batteries, heat pumps and carbon capture technologies. These are all key elements of the energy transition. Just ten years ago, EU research was leading the way in clean energy technologies; today it is China.

According to the report, the EU is becoming increasingly dependent on China

"China is increasingly becoming a global leader in science and innovation in several critical technologies," says the EPRS paper. It thus counteracts the "de-risking" strategy of EU Commission President Ursula von der Leyen, who had set the goal of reducing dependence on China for important technologies, including solar cells. The opposite has apparently happened: the EU's dependence on China has risen to around 22% of all imports in recent years, while the proportion of Chinese imports in the USA has fallen over the years, according to the report.

The EU likes to position itself as a supposed global pioneer in climate protection, but in fact China has long since moved into the fast lane on this issue. The Chinese strategy: Beijing is taking much longer to phase out fossil fuels and is using these years to prepare for the age of renewable energies with research and development. The EU strategy of phasing out fossil fuels before the conditions for a green energy economy have been created is met with incomprehension in China.

China's research lead goes beyond clean energy

According to the EPRS report, China's technological lead and the EU's dependence on it are not limited to renewable energies. The research paper by the European Parliamentary Research Service also confirms a strong dependence on Chinese inputs in international supply chains for EU industries such as base metals, chemicals, electronics and electrical appliances.

China's lead in research will give it a massive competitive advantage in green technologies in the coming years. In the automotive sector, we are already seeing how Chinese manufacturers are vehemently penetrating the EU with electric cars. This development will quickly spread to other branches of industry.

Continuous market observation instead of unpleasant surprises

Companies from the EU should therefore continuously familiarize themselves with current developments in China in order to be able to react in good time. Western companies can protect themselves from unpleasant surprises by continuously monitoring the Chinese market in their area. One example of this is the far-reaching legislative changes for foreign companies that are due in July 2024, for which it is important to be prepared.

* Karlheinz Zuerl is CEO of the German Technology & Engineering Corporation (GTEC). This helps western companies to overcome challenges in Asia. The focus is on business development, the establishment and expansion of branches and production facilities, as well as restructuring and turnaround measures to bring companies back into the profit zone in critical phases.