Sunday, Oct 01, 2023

EU Considers More Defensive Economic Policy Amid Geopolitical Risks and China Dependence

EU Considers More Defensive Economic Policy Amid Geopolitical Risks and China Dependence

Ursula von der Leyen, the President of the European Commission, is pushing for a shift in EU economic policy towards a more defensive stance, away from the liberal free trading policies of the past decade.
The EU's President, Ursula von der Leyen, has said that the bloc needs to "de-risk" its relationship with China while stopping short of decoupling.

The EU is also considering implementing a measure called outbound investment screening, which would require EU countries to check on investments made by European private companies abroad to prevent the transfer of sensitive technology.

This measure is part of the EU's growing trade defense toolbox and would be targeted towards sensitive technologies that could lead to military capabilities.

However, some free traders are concerned that this could raise obstacles that are not warranted from an economic point of view.

The Dutch government has expressed concerns and will scrutinize the plans, while businesses have also raised concerns about the potential impact on future economic prosperity.

The US has also been discussing a similar approach with industry but has not yet implemented it.

The EU Commission will need to clarify the risks and why additional regulation is necessary for the measure to be implemented successfully.

The shift towards a more defensive economic policy is a sign of the changing times. The world is becoming more interconnected and interdependent, and the EU is no longer immune to the geopolitical risks that are buffeting the global economy.

The EU needs to find a way to balance its economic interests with its security interests. This will not be easy, but it is essential if the bloc wants to remain prosperous and secure in the years to come.

Here are some of the reasons why the EU is considering a more defensive economic policy:

Geopolitical risks:
The world is becoming more unstable, and the EU is no longer immune to the geopolitical risks that are buffeting the global economy. The bloc is facing a number of challenges, including the rise of China, the threat of terrorism, and the conflict in Ukraine.

China's growing economic power:
China is the world's second-largest economy, and it is rapidly growing its economic and military power. The EU is concerned that China's growing power could pose a threat to its economic and security interests.

Dependence on China:
The EU is heavily dependent on China for a number of key goods and services, including energy, raw materials, and technology. This dependence makes the EU vulnerable to Chinese economic coercion.

The EU is hoping that a more defensive economic policy will help it to reduce its dependence on China and protect its economic and security interests. However, it is unclear whether this policy will be successful. The EU will need to carefully balance its economic interests with its security interests.

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