Fragmented Europe: Dealing with China as a technology and innovation power

This report is a publication by the European Think Tank Network on China (ETNC) and discusses how individual European member states, as well as the EU as a whole, deal with challenges related to China as a technology and innovation power. The report includes 24 national chapters and one dedicated to the EU. Clingendael contributed the Dutch chapter (p.132-141).

Executive summary

The Netherlands: Chipping away at technological dependencies on China and the cases of ASML and Nexperia

Technology plays a crucial role in Sino-Dutch relations. The Netherlands has a strong high-tech industry that is entangled with and dependent on Chinese players. Simultaneously, China is still reliant on critical technology and expertise from Dutch universities and companies like chip machine manufacturer ASML. This gives the Netherlands leverage – but also makes it vulnerable to the US-China technological competition. The duality is reflected in tech policy and practice. The Dutch government encourages cooperation in areas such as green governance, agritech, and water management. However, it also has a strong focus on economic security and technological de-risking. This causes tensions in the relationship with China, as the case of Nexperia showed. The Dutch government intervened in this Chinese-owned semiconductor company over concerns of dependencies and technology and knowledge leakage. Looking ahead, the challenge for the Netherlands lies in operationalising a delicate balance between protection and cooperation.

In short

• The increasing intertwinement of geopolitics and technology strongly affects the relationship between the Netherlands and China.
• The Dutch approach to China is shaped by the principle of ‘open where possible, protecting where necessary’, which combines stronger economic security policy with selective cooperation in areas such as water management, agritech and green technology.
• The chapter shows that the Netherlands has become a European frontrunner in economic security policy, with instruments such as knowledge security guidelines, investment screening and new mechanisms to protect strategically important companies and industries. 
• The ASML and Nexperia cases illustrate that dependencies are increasingly weaponised. 

• Although fundamentally different in nature, both instances have shown how decisions made in The Hague and Beijing expose chokepoints and impact global supply chains.

   

Executive summary full report

Fragmented Europe: Dealing with China as a technology and innovation power

China’s drive to become a global leader in science, technology and innovation has huge implications for the EU and its member states. On the one hand, China is becoming a strong competitor in industrial high-tech sectors and innovative science that used to be the stronghold of European actors. Advanced digital technologies made in China also increasingly pose risks to infrastructures in Europe. On the other hand, China offers itself as a resourceful counterpart for collaboration in research and development (R&D) and keeps attracting European scientists and businesses alike.

This report, the 12th compiled by the European Think-tank Network on China (ETNC), analyses how Europe is affected by China’s rise to a technological power and its increasing clout in shaping and creating innovation. Authors from 24 European countries have contributed to this study. The goal is to provide a nuanced picture of how those states interact with China in the field of innovative technologies, and to identify commonalities and differences in how they are affected.

In short

• The report analyses how China’s rise as a technology and innovation power affects Europe, drawing on contributions from 24 European countries.  
• China is no longer only a manufacturing power. It is an increasingly capable competitor in advanced sectors such as semiconductors, electric vehicles, batteries, green technology, AI, robotics and biotechnology. 
• Across Europe, policy is shifting from openness towards de-risking, economic security and research security, although implementation still differs sharply between countries. 
• European states face similar dilemmas but respond differently: some prioritise risk mitigation and technological sovereignty, while others continue to stress investment, industrial cooperation and pragmatic engagement with China. 
• The report concludes that European coordination is essential, but difficult, as governments must balance competitiveness, security, supply-chain resilience and the continued need for selective cooperation with China.

Download full report.