October 20, 2020

Charting a Transatlantic Course to Address China

By Julianne Smith, Andrea Kendall-Taylor, Carisa Nietsche and Ellison Laskowski

Executive Summary

Mounting competition between China and liberal democracies will shape the course of the 21st century. The gravity and scope of the challenges that China poses have permeated the transatlantic policy agenda and become a focal point in U.S.-Europe relations. Whereas China has long been a source of disagreement and even tension between the transatlantic partners, in the past two years views have converged. The Chinese Communist Party’s (CCP) assertive actions—its “Wolf Warrior” diplomacy, aggressive influence operations, human rights violations at home, and elimination of fundamental freedoms in Hong Kong—have increased concerns in both the United States and Europe. There is now fertile ground for transatlantic cooperation on everything from reducing dependency on Chinese trade and investment to setting global norms and standards for the future. Yet, despite this convergence of views and interests, there is still no roadmap for how such cooperation should progress.

This report outlines such an approach. It is based on the premise that the time is ripe for greater transatlantic cooperation on China. It also recognizes the comprehensive nature of the task at hand. Today’s controversies with China over trade, investment, technology, and global governance are all part of a larger competition between political systems and worldviews. The breadth of the challenge means that the United States and Europe must compete with China across multiple domains. This report lays out a roadmap for doing so, outlining concrete recommendations across the four sectors of technology, investment, trade, and global governance. By working together, the United States and Europe can pool the resources and leverage needed to push back against the CCP in these areas and develop preferred alternatives that advance strategic priorities for both sides of the Atlantic. Moreover, the strategies outlined in this report will also serve a second purpose: re-energizing the ailing relationship between Europe and the United States.

In crafting a transatlantic approach to China, policymakers should consider the following six principles:

1. Act With Urgency.

The United States and Europe have no time to waste in coordinating their approach to China. Already, China has pulled ahead in areas such as artificial intelligence (AI) and fifth-generation wireless technology (5G), and the CCP has set its sights on dominating additional sectors, such as quantum computing and genomics. More broadly, the CCP senses opportunity. The Trump administration’s abdication of U.S. leadership and the perceived weakness of U.S. alliances, especially in Europe, have emboldened the CCP to more aggressively seek to undermine liberal democracy to advance its own authoritarian vision.

2. Aim for Coordinated, if Not Common, Policies.

Given tensions in the transatlantic relationship and European concerns about mounting U.S.-China tensions, there is a strong push among many European officials for Europe to stake out its own China policy. But it is critical that these efforts be made in close coordination with the United States. Likewise, a go-it-alone approach in Washington will fail to produce results. The international community will be effective in shaping CCP policies and actions only if it builds a large and cohesive coalition of forces. Transatlantic cohesion and unity, in other words, will be critical to success.

3. Strengthen U.S. and European Competitiveness.

The United States’ and Europe’s own competitiveness will be the primary determinants of success in the contest with China. The United States and Europe must ensure that they maintain advantages in key areas such as technology, clean energy, and AI, while at the same time ensuring that their underlying values of freedom and democracy are protected. Increasing transatlantic coordination is a key part of the equation, providing the United States and Europe with a critical advantage over Beijing.

4. Engage Europe at All Levels.

Building an effective transatlantic coalition to address China will require the United States to engage Europe at all levels—the European Union (EU), individual member states, and NATO. The EU will be the critical interlocutor, but U.S. policymakers must recognize that Brussels will not be a one-stop shop. Because EU member states are responsible for implementation of guidance from the EU, U.S. government officials must also engage with European capitals to improve what has so far been uneven implementation. The United States should also continue to push NATO to address the China challenge, including through greater coordination with the EU.

5. Expand Beyond the Transatlantic Players.

U.S. officials should look to broaden some discussions on China to include other like-minded democracies, such as Taiwan, Japan, Australia, India, and Canada—countries with considerable experience managing the CCP and countering its tactics. By widening the circle of countries at the table, the United States could help overcome some European concerns that the United States is attempting to protect U.S. interests in its competition with China. Broadening the conversation will also facilitate the sharing of best practices and risk assessments among liberal democracies.

6. Remain Open To Engagement With China.

Pursuing a transatlantic approach to China does not mean that Europe or the United States should forfeit all engagement with China. It is critical that the United States and Europe continue to engage China on shared challenges, including climate change, counter-piracy, arms control, the Democratic People’s Republic of Korea, and peacekeeping operations. But as they do so, the transatlantic partners need to move China in directions that are important to the United States and Europe and to ensure engagement is consistent with existing norms and standards.

A Transatlantic Roadmap to Manage China’s Rise

Effectively addressing China will require the United States and its transatlantic partners to compete across several critical domains. This report lays out recommendations for cooperation on technology, investment, trade, and governance issues.

Technology as a Transatlantic Project

Protect U.S. and European Technology Advantages

  • Work with like-minded allies including Japan, South Korea, and Taiwan to share best practices and establish multilateral export controls.
  • Increase commercial intelligence sharing between the United States and Europe.

Enhance Western-Led Innovation

  • Develop industrial strategies and capabilities in concert.
  • Jointly develop technologies, align regulations, and promote democratic norms.
  • Open innovation ecosystems and pool research and development (R&D) funding.
  • Build the transatlantic workforce to lead innovation in technology.
  • Work through NATO to promote and coordinate defense innovation to secure NATO’s military edge.

Compete With China’s Digital Infrastructure

  • Create a multilateral coalition between the United States and like-minded allies to develop fifth-generation wireless technology (5G) risk assessments.
  • Encourage joint R&D and the deployment of open radio access network solutions for 5G.
  • Give European allies incentives to procure secure 5G technologies.
  • Create alternatives to China’s digital infrastructure projects in Europe and across the globe.

Set Norms and Standards

  • Increase alignment on data privacy to counter China’s noncompliance with data privacy.
  • Align U.S. and European technology norms and standards.

Combat China’s Digital Authoritarianism

  • Prevent U.S. and European entities from enabling China’s human rights abuses.
  • Raise the cost on China for technology-fueled human rights abuses and the proliferation of illiberal technology.

Investment as a Transatlantic Project

Counter China’s Belt and Road

  • Provide joint consultations to countries considering Chinese investment.
  • Develop a U.S.-EU investment fund and engage regional partners.
  • Build a transatlantic public diplomacy campaign to more accurately depict China’s Belt and Road practices.

Strengthen Investment Screening Mechanisms

  • Use Foreign Investment Risk Review Modernization Act regulations to push Europe toward more effective national screening mechanisms.
  • Use the Financial Action Task Force to push the United States toward greater transparency.
  • Use antitrust policies to address unfair and distortionary practices of Chinese firms.

Broaden Investment Screening Dialogues and Transatlantic Coordination

  • Create regular executive agency dialogues to coordinate on investment screening decisions.
  • Strengthen transatlantic information and intelligence sharing as Europe and China negotiate the Comprehensive Agreement on Investment.
  • Broaden the dialogue on investment screening beyond the European Union and the United States.
  • Expand the dialogue on Chinese investment to the private sector and academia.
  • Strengthen NATO-EU cooperation on Chinese investment.
  • Enhance intelligence sharing among EU member states and between the EU and the United States on foreign investment screening.
  • Enhance dialogue between the U.S. Congress and European parliaments.

Look Beyond Chinese Investment

  • Monitor R&D collaboration.

Trade as a Transatlantic Project

Repair the U.S.-EU Economic Relationship and Rebuild Trust

  • Resume U.S.-EU trade negotiations.
  • Rebuild trust in the transatlantic trade relationship.
  • Revive the Transatlantic Economic Council.
  • Diversify supply chains.

Promote a Fair Trading System

  • Collaborate on World Trade Organization (WTO) modernization and reform.
  • Coordinate with the EU and Group of 77 democracies on upcoming appointments in industrial standard-setting bodies, such as the International Telecommunication Union and International Organization for Standardization.
  • Bring a comprehensive case against China in the WTO.
  • Discipline China for its state-owned enterprises and state subsidies in the WTO.
  • Invite China to join the export credit arrangement in the Organization for Economic Co-operation and Development.

Secure U.S. and EU Technological Advantages

  • Join the EU case against China’s intellectual property practices.
  • Pool data on China’s technology transfers.
  • Avoid lifting any of the Section 301 tariffs on China until it demonstrates measurable change.
  • Establish multilateral export controls on semiconductor manufacturing equipment.

Governance as a Transatlantic Project

Recommit To International Institutions

  • Show up.
  • Start with the World Health Organization.
  • Lift human rights and reform the U.N. Human Rights Council.
  • Lead on technology norms and standard setting.
  • Prioritize U.N. leadership elections.

Increase Visibility Across the United Nations System

  • Invest in the future.
  • Develop personnel.

Deepen Shared Knowledge

  • Make Chinese Communist Party (CCP) influence a standing topic of discussion in regular bilateral dialogues.
  • Expand whole-of-government efforts.
  • Report annually on Beijing’s tactics to advance its objectives across the U.N. and on counterstrategies.
  • Develop and share expertise within institutions about CCP ideology and propaganda.
  • Involve the legislatures.

Reframe the Competition

  • Make stark the contrast between democracies and autocracies.
  • Engage in more proactive public diplomacy.
  • Promote an alternative for the developing world and do more to engage it.

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Authors

  • Julianne Smith

    Former Adjunct Senior Fellow, Transatlantic Security Program

    Julianne (“Julie”) Smith is a contributing editor to Foreign Policy, where she coedits “Shadow Government.” She is also a senior advisor at WestExec Advisors, an adjunct senio...

  • Andrea Kendall-Taylor

    Senior Fellow and Director, Transatlantic Security Program

    Andrea Kendall-Taylor is a Senior Fellow and Director of the Transatlantic Security Program at the Center for a New American Security (CNAS). She works on national security ch...

  • Carisa Nietsche

    Associate Fellow, Transatlantic Security Program

    Carisa Nietsche is the Associate Fellow for the Transatlantic Security Program at the Center for a New American Security (CNAS). She specializes in European security; China’s ...

  • Ellison Laskowski

    Senior Fellow, German Marshall Fund of the United States

    Ellison Laskowski is a Senior Fellow in the Asia Program at the German Marshall Fund of the United States. Previously she served as a foreign service officer at the U.S. Depar...

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