Introduction
In the last decade, the rapid technological advancement and escalating geopolitical tensions have geopoliticised cyberspace. Digital technologies have emerged as a pivotal force, reshaping nations and alliances in an intensifying technological race. However, states face difficulties defining the boundaries of a globalised and borderless digital ecosystem. Amongst this conceptual vacuum, states have attempted to gain control over the digital divide, with China and the United States at the forefront of the race. Against this backdrop, the European Union's efforts to establish itself as a strategically autonomous and digital sovereign player take on added significance.
Strategic, low-level, and geopolitical competition has become the state of play in the digital domain. A comparative examination of the digital transformation trajectories of China illuminates stark contrasts with the EU's approach. While China's model is characterised by overt state control, the European strategy navigates between protecting its internal market, championing free trade, and safeguarding fundamental rights.
This article explores how the EU and China navigate the complexities of asserting its digital sovereignty and strategic autonomy while pursuing geopolitical ambitions, with both aiming to become economic and normative powers. A comparative analysis will be conducted to examine the challenges, strategies, and global ramifications of the solutions implemented by the EU and China.
Setting the Stage: Digital Advancement Comparison
Before diving into strategies and policies implemented by the two entities, it is important to identify the tangible challenges of cyberspace development that shape their understanding of digital sovereignty. In this context, sovereignty is defined as the Krasnerian combination of control and authority in policy areas, both internally and externally (Kranser, 1999). Countries often run into major obstacles in cyber development when fostering digital infrastructure to advance connectivity and digitalising businesses. These two areas may come into conflict with principles of social equity, digital rights, and environmental responsibility claimed by both powers.
Digital infrastructure and connectivity
In the realm of digital infrastructure, both actors have made significant strides in expanding 5G coverage and bolstering semiconductor production. However, they face distinct challenges that impact their competitiveness and technological advancement. The potential rewards are high for advancing network coverage, as 5G and 6G-enabled activities, like artificial intelligence, are projected to generate 3 trillion euros in global growth by 2030 (McKinsey, 2020). Meanwhile, although semiconductors are essential to all digital technologies, it has a fragile global supply chain.
Regarding 5G, both regions have been actively working to expand its coverage, reaching 81% in Europe and 86% in China (European Telecommunications Network Operators’ Association, 2023). However, inequalities persist. While China has uneven coverage across industries (Beridze, 2021), Europe has disparities between urban and rural areas (European Commission, 2023). Furthermore, 5G connections require 5G mobile subscriptions to reach the population. Here, China continues to lead with 42.9% growth between 2021 and 2025, while the EU’s figure grew only at 3.6% for the same period (European Telecommunications Network Operators’ Association, 2023). Another important consideration is security, where the EU lacks robustness in 5G networks resilience as shown with its telecommunication investments. In 2021, Europe spent EUR 104bn compared to EUR 150bn in the USA and EUR 110bn in China. In the same manner, European cloud providers’ market share has decreased from 26% to 16% between 2017 and 2020, leaving the sector increasingly dominated by non-European actors (Synergy Research Group, 2021). As a result of these obstacles, 5G technology continues to fall short of meeting both end-users' expectations and industry demands.
The concentration of semiconductor production in Asia, coupled with the rising demand for chips that is expected to exceed $1 trillion by 2030, has heightened supply chain fragility (McKinsey, 2022). While the EU boasts strengths in R&D and manufacturing equipment, addressing chip design and assembly weaknesses remain crucial (European Commission, 2023). China's potential to increase its semiconductor market share, together with the the trend to decouple China from the ‘Global North’ has led to pressure to remove Chinese equipment from telecom networks in Europe and in the US, resulting in competing industry standards and disruption. Despite increasing competition and substantial investments, no region is projected to achieve end-to-end capabilities for semiconductor design and manufacturing by 2030 (McKinsey, 2020).
Digitalisation of Businesses
Amidst economic volatility and supply chain uncertainties, the digitalisation of businesses emerges as vital for economic success and growth. It enables companies to review their business models, enhance efficiency, and bolster resilience. As a result, both the EU and China are focused on fostering widespread adoption among SMEs and SOEs respectively, as well as nurturing the growth of unicorns - a startup with a value of over USD 1bn.
The EU's initiatives primarily aim to promote digitalisation among SMEs, but policy inconsistencies persist. Projections suggest that by 2030, only 66% of businesses will adopt cloud technology, 34% will utilise big data, and 20% will implement Artificial Intelligence (AI) (European Commission, 2023). In comparison, the US boasts twice as many SMEs with an international presence incorporating IoT, cloud, 5G, and AI technologies (European Investment Bank, 2023). Both Washington and Beijing dominate the landscape, securing over 80% of the €35 billion annual equity investments in AI and blockchain (European Commission, 2023). Furthermore, at the start of 2023, only 249 unicorns were based in Europe as compared to 1444 American and 330 Chinese ones (European Commission, 2023). The dominance of American and Chinese multinational corporations in the digital market poses risks to Europe's ability to control its data and digital infrastructures fully. As a result, China and, to a lesser extent, the US, are perceived not only as economic rivals of the EU but also as security concerns, especially on issues such as espionage and data security.
The EU’s strategy: Towards Strategic Autonomy and Technological Sovereignty
At the core of the EU digital strategy lies the pursuit of strategic autonomy and technological sovereignty, concepts that have gained prominence after its ‘Global Strategy for Foreign and Security Policy’ (EU External Action Service, 2016). The Council defined strategic autonomy as the ‘capacity to act autonomously when and where necessary and with partners wherever possible’ (Council of the European Union, 2016, p.17), while technological sovereignty embodies the EU's desire to have control over its technological choices based on its own values and rules (European Commission, 2020). However, Brussels faces constraints in geostrategic matters due to the strong protection of national interests by its Member States. Consequently, the EU is confronted with the task of striking a balance between safeguarding the internal market and maintaining its (self-)identity as a regulatory and normative power (Broeders, Cristiano and Kaminska, 2023).
Central to the Brussels's efforts to realise its vision of digital sovereignty is the Digital Decade Policy Programme, a comprehensive initiative aimed at fostering digital resilience, competitiveness, and innovation within the region (European Commission, 2023). This ambitious agenda places digital infrastructures and the digitalisation of businesses at its core, recognising them as essential pillars of Europe's digital future. Through close collaboration with Member States and stakeholders, the EU seeks to empower the region to emerge as a global leader in the digital age, driving innovation and enhancing digital infrastructures to promote economic growth and competitiveness.
The EU's digital transformation efforts rely heavily on digital infrastructures, particularly the development of 5G networks and semiconductor manufacturing. Through initiatives such as the multi-country projects (MCPs) and the European Digital Infrastructure Consortia (EDIC), the EU aims to pool resources and accelerate the delivery of common industrial digital projects, mitigating internal market weaknesses (European Commission, 2023). Simultaneously, the Commission has introduced the 5G toolbox, imposing restrictions on national markets to protect 5G infrastructures from cyber-attacks, including those on supply chains (Broeders, Cristiano and Kaminska, 2023). Additionally, initiatives like the EU Chips Act aim to bolster the region's digital infrastructure and strengthen its position in semiconductor manufacturing (European Commission, 2023). According to President Von der Leyen, it is ‘not just a matter of our competitiveness’ but ‘also a matter of tech sovereignty’ (European Commission, 2021). These actions reflect the EU's commitment to ensuring that its regulatory frameworks promote resilience and security in essential technologies while maintaining the EU’s economic power status.
The Digital Decade Decision also outlines ambitious objectives for advancing the digital transformation of businesses, prioritising a delicate balance between geopolitical investments and normative considerations. It introduces regulatory frameworks like the Data Governance Act, a cross-sectoral tool designed to regulate the reuse of protected data held by public entities to encourage data sharing (Broeders, Cristiano and Kaminska, 2023); and the AI Act, which represents a landmark regulation in AI governance. Both aim to converge the Commission’s strong competence in the internal market with its technological sovereignty while protecting fundamental rights (Broeders, Cristiano and Kaminska, 2023). Complementary initiatives such as the Important Projects of Common European Interest (IPCEIs) play a crucial role in addressing identified strategic dependencies and strengthening the resilience of the supply chain through the Public-Private Partnership (European Commission, 2023). Through these measures, the Commission aims to stimulate innovation and competitiveness while remaining steadfast in its commitment to fostering human-centred digital environments and upholding fundamental rights.
In conclusion, the EU's pursuit of digital sovereignty and strategic autonomy reflects its ambition to assert its independence and influence in an increasingly digitised world. Through initiatives such as the Digital Decade Programme, Brussels aims to strengthen its digital infrastructure, promote innovation, and drive economic growth, while also ensuring that its regulatory frameworks uphold fundamental values and rights. As the EU navigates the complexities of digital governance, striking a delicate balance between geopolitical investments and normative considerations will be crucial for maintaining its relevance and influence in the digital age.
The Chinese Path: A New Industrialisation with Chinese Characteristics
China's digital policy is characterised by ambitious initiatives to establish itself as a global leader in the digital arena. The objectives encompass achieving stable socioeconomic growth, effective governance, global digital leadership, and security targets (Anatolii, Andrii and Olena, 2021). The Chinese model is characterised by authoritarian components, wherein personal data security is often overlooked, and a high governmental involvement resulting in sovereign rights being claimed over their ‘national info-sphere’ (Broeders, Cristiano and Kaminska, 2023). These goals are pursued through political initiatives that shape global digital standards, influence technological development, and facilitate the expansion of state-owned enterprises (SOEs). Central to the Chinese approach is the direct involvement of the State in digital processes and substantial political backing for its technology giants, as evidenced by initiatives such as the "Made in China 2025" project and the Digital Silk Road. It is important to note that Beijing's digital ambitions extend beyond purely economic or civilian endeavours and encompass broader normative and security objectives of the government (Beridze, 2021).
China's digital policy encompasses both internal efforts to address domestic challenges and external initiatives aimed at bolstering its global influence. Domestically, the government is executing a strategic plan known as "Made in China 2025" to enhance the quality and innovation capacity of the manufacturing industry, and to boost reliance on Chinese technologies in the global marketplace (Li, 2018). This plan aims to promote intelligent manufacturing to meet economic, social, and national defence needs by creating a path for a new industrialization with Chinese characteristics (Chinese State Council, 2015). The State is deeply involved in this initiative, providing direct subsidies and foreign investments, particularly in the development of digital infrastructure. Additionally, PRC is actively promoting the digital transformation of businesses, with projects such as the Digital Transformation Partnership Initiative aimed at assisting small, medium, and micro enterprises in navigating the digital landscape (National Development and Reform Commission, 2021). SOEs, which play a critical role in the Chinese national economy, are encouraged to undergo digital transformation, enhancing their competitiveness (Liu et al., 2024). The government fosters competition among enterprises, advancing controlled infrastructure development in urban and rural areas (Anatolii, Andrii and Olena, 2021). Beijing's emphasis on data security is underscored by laws such as the National Intelligence Law and the Data Security Law, both aimed at advancing internal data control, which limits the activity of foreign organisations in the Chinese ICT market (Anatolii, Andrii and Olena, 2021).
Externally, the Digital Silk Road embodies the Chinese government's aspiration to assume leadership in emerging technologies and connectivity, characterised by authoritarian components (Beridze, 2021). This state-backed initiative seeks to export its model of centralised control and surveillance, leveraging digital infrastructure development along maritime and terrestrial routes to boost its geopolitical influence. AI is identified as one of the main strategic tools to foster economic and political reliance among partner states, for example through voice and facial recognition (Beridze, 2021). According to the RWR Advisory Group, a Washington-based consulting firm tracking Chinese investments, Digital Silk Road-related investments reached an estimated US$79 billion in digital infrastructure projects by 2018, encompassing diverse telecom initiatives worldwide (Prasso, 2019). Moreover, PRC's engagement in international forums and initiatives related to AI and digital governance underscores its commitment to shaping global digital standards and governance norms that align with China's interests (Broeders, Cristiano and Kaminska, 2023).
Looking ahead, China will continue to prioritise digital development as a cornerstone of its national strategy. Beijing’s ultimate goal is to diminish reliance on foreign technology, promote Chinese high-tech manufacturers in the global marketplace and shape global digital standards and governance norms. With a coordinated approach that combines government policy, industry collaboration, and research innovation, China aims to cement its position in cyberspace.
Conclusion: Divergent Paths and Converging Ambitions
In conclusion, the divergent paths and converging ambitions of China and the EU present complex implications for global cyberspace dynamics. Beijing and Brussels exhibit distinct strategies and approaches in managing digitization processes, reflecting their unique geopolitical positions and understanding of sovereignty. The divergent paths of digital transformation taken by China, characterised by authoritarianism, stand in contrast with the EU's fundamental principles. While PRC prioritises government involvement through a model of centralised control and surveillance, the EU's approach leans towards protecting the internal market without overstepping the line of protectionism to maintain its position as a normative power grounded in values and regulation. Achieving this objective of digital sovereignty and strategic autonomy necessitates finding a delicate balance between upholding fundamental values and ensuring global competitiveness. Therefore, digital sovereignty takes the form not only of localisation law but also of legislation having an extraterritorial scope. Globally, the coexistence of multiple sovereignties underscores the need for international cooperation and plurality to navigate the complexities of digital governance in a post-territorial world (Fabbrini, Edoardo and Quinn, 2021).
This article does not necessarily reflect the opinions of European Guanxi, its leadership, members, partners, or stakeholders, nor of those of its editors or staff. They have been formulated by the author in their full capacity, and shall not be used for any other purposes other than those they are intended for. European Guanxi assumes no liability or responsibility deriving from the improper use of the contents of this report. Any false facts, errors, and controversial opinions contained in the articles are proper and exclusive of the authors. European Guanxi or its staff and collaborators cannot be held responsible or legally liable for the use of any and all information contained in this document.
ABOUT THE AUTHOR
Berta Tarrats Castillo holds a Bachelor’s Degree in International Relations from Blanquerna-Ramon Llull University (Barcelona, Spain). Her past writing collaborations include El País, ISGlobal, PMFarma and RECERCAT. The main elements of her portfolio include Sustainable Development Goals, the Digital Silk Road, digital policy, social movements theory and health policy. She is currently working as a business and strategy IT consultant in the public sector. You can find her on LinkedIn.
This article was edited by Kalos Lau and Luca Rastelli.
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