Declaratively, European Union leaders are increasingly concerned about the risk of growing dependence on Chinese technology as Europe moves forward in its transition to green energy. Politicians are talking about the need for measures to limit this risk amid reports that the EU’s dependence on China could be as aggressive as it is on Russian energy.

But, as in relations between the EU and Russia, the situation seems to be repeating itself. Last year, the EU had the largest trade deficit with China in history – almost 400 billion euros.

How much Europe has learned from the precedent with Russia

After the 2009 crisis, when Russia blackmailed the EU by blocking gas transit to Europe through Ukraine, European leaders declared the need to diversify supply sources. But the more politicians talked about reducing dependence on Russian gas, the more the EU connected to Gazprom’s pipelines. In fact, major European companies participated in the construction of the Russian-German Nord Stream 2 gas pipeline, a project that only increased dependence on Russian gas even more.

Europe became so vulnerable that in 2021 it found itself in a major energy crisis caused by Moscow’s games on European markets, but only in 2022, after Russia’s invasion of Ukraine, did the EU see fit to get out of this trap. Sources of supply have been diversified, and the EU has proven that it can even survive winters with less Russian gas.

Now the same story seems to be repeating itself with regard to relations with China. European officials are concerned about flooding the market with Chinese technology, but nothing seems to be stopping the flow of imports.

The case of the investigation of the import of electric cars against. the case of Gazprom

The European Commission has recently officially launched an investigation into the mass importation of cheaper Chinese electric cars that would receive government subsidies. The Commission’s aim is to decide whether to impose tariffs to protect European car manufacturers.

The European market is “flooded” with Chinese-made electric cars, where companies receive large subsidies from the state, subsidies that allow companies to sell these cars in Europe at abnormally low prices.

The Chinese got 86,000 electric cars delivered in seven months, 8.3% of the European all-electric car market. The share was just 0.5% in 2019 and 3.9% in 2021, the data also show. The UK is the largest market for Chinese electric cars in Europe, around a third of the total.

Sources told Reuters that other investigations into Chinese exports, such as wind technology, were likely to follow.

A few years ago, the Russian giant Gazprom was also under investigation by the European Commission on the grounds that it violated EU antitrust rules. In 2018, after a three-year investigation, the Commission announced that it was imposing obligations on Gazprom aimed at ensuring the free flow of natural gas at competitive prices on the natural gas markets of Central and Eastern Europe. On the other hand, despite the “investigation”, Gazprom’s relations with the EU are strengthening. The construction of the Northern Stream gas pipeline, and the Turkish Stream in the south with a branch to Bulgaria, began quickly.

How EU leaders talk about reducing dependence on China

European leaders gathered in Granada, Spain on 5 October to discuss how the EU should be at the forefront of green technology. They decided, as Reuters reports, to reduce dependence on China by strengthening the single market. “We will strengthen our position as an industrial, technological and commercial state,” said the statement following the EU summit in Spain.

A discussion paper obtained by Reuters shows that the European Union could become as dependent on China for lithium-ion batteries and fuel cells by 2030 as it was on Russia before the war in Ukraine unless decisive action is taken.

Due to the intermittent nature of renewable energy sources such as solar or wind, Europe will need ways to store energy to meet its 2050 net carbon reduction target.

Thus, in the coming years, the demand for lithium-ion batteries, fuel cells and electrolyzers will increase up to 30 times.

The EU has a strong position in the intermediate and assembly stages of electrolyser production, with a global market share of more than 50%, but relies heavily on China for the production of fuel cells and lithium-ion batteries needed for electric vehicles.

“Without the implementation of decisive measures, the European energy ecosystem could have a dependence on China by 2030 of a different nature, but with a similar intensity, compared to the one it had on Russia before the invasion of Ukraine,” the document says.

European Commissioner’s message to the Chinese: we want risk reduction, not separation

European Commissioner for Energy Kadri Simson spoke on October 11 at Peking University with many nuances that could leave room for interpretation. Kadri Simson said, recalling the investigation into electric cars, that what is needed is risk reduction, not shutdown.

“Separation is a strategy of disconnection, destruction of ties, building walls. Unbundling leads to a world of energy islands, which, as I said, is the worst-case scenario for the clean energy transition. Risk reduction is a policy of diversification, prevention of addictions. and maintaining Europe as an open continent for exports. This is a policy that can help establish the conditions for a fair and lasting relationship and energy trade between Europe and China,” Kadri Simson said.

The European Commissioner clarified that the investigation will be carried out impartially, transparently and in full consultation with all market operators.

Last year, the EU had its largest trade deficit with China on record, at nearly 400 billion euros, said Kadri Simson, who says the EU is calling for reciprocity and transparency as European companies face barriers to access to the important and growing Chinese market.

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