China should seek to find common ground with the EU on the development of the digital economy.

The European Union is now pushing forward a digital transformation strategy. The strategy, coupled with the implementation of a series of measures, will affect the digital relationship between China and the EU in the following three aspects.

First, under the political discourse of technological sovereignty and digital sovereignty, the EU has adopted a more opportunistic position between China and the United States. Against the backdrop that the strategic competition between China and the US will dominate the international landscape, the EU will continue to bet on both nations to expand its strategic autonomy in the digital sector. The EU's decision-making to promote digital transformation will also differentiate in different areas and at different levels, and adopt different attitudes toward China and the US. In response to the dominant role of large US technology companies over its platform economy, while continuing its coordination with the US on key issues such as digital technology standards and secure supply chains, the EU has launched a series of anti-monopoly laws such as the Digital Markets Act and Digital Services Act in the name of safeguarding its digital sovereignty, and imposed a digital tax on the large platform companies, especially US tech giants. In areas such as antitrust and platform economic governance, there is room for the EU to cooperate with China to counterbalance the US dominance.

Second, the EU will give priority to political logic when developing its digital relations with China. Politics has become an important criterion for Brussels to handle its relations with Beijing. The emphasis on technological and digital sovereignty is a reflection of the strengthening of such political logic, and it is reflected in the politicization of economic relations in foreign relations. The EU will place more emphasis on political considerations, such as security, human rights and democratic values. For example, for political reasons, the EU may selectively reduce its cooperation with Chinese companies in key technology areas and reduce its technological dependence on China, while Chinese products may also face more stringent security scrutiny when entering the EU market.

Third, the EU's need for digital transformation and demand for strategic autonomy reflect its dual political and economic demands in the digital sector.

On the one hand, the EU shares strong economic and trade ties with China, and EU countries still have a strong interest in seizing China's development opportunities and taking advantage of China's huge digital market. During President Xi Jinping's virtual summit with EU leaders in September 2020, the two sides decided to establish a high-level dialogue in the digital sector and seek to build a China-EU digital partnership. With their demand for China's vast market, there is a need for EU companies to integrate with China's digital infrastructure, ecosystem, cloud services and data applications. It is unrealistic for leading EU companies that attach importance to the Chinese market to completely decouple from China in the digital field.

On the other hand, the EU is increasingly considering the growth of China's digital technology and industry as a threat along with intensified competition between the two sides. It is becoming increasingly obvious that the EU is now seeking to get rid of its dependence on China's industrial chains over key digital technologies. The EU hopes to seize opportunities from the development of digital technology and respond to internal demands over the digital space in the face of its own relative backwardness in digital technology. The bloc hopes to strengthen its power at the institutional level and bolster its digital technology capabilities and the influence of EU ideology so as to promote its own digital transformation and shape a digital transformation with EU characteristics.

China should come up with a long-term plan in response to the EU's digital transformation strategy, and put the EU's pursuit of so-called sovereignty and even strategic autonomy in a prudent perspective in the nation's strategic competition with the US. It is important for China to expand the room for its cooperation with the EU over green development, the governance of the platform economy and antimonopoly－areas the EU has given high priority to－and strive to maintain the role of economic and trade cooperation as a ballast in the China-EU relations. Meanwhile, China should be prepared to respond to the EU's protectionist measures in the name of sovereignty and its push for decoupling with Chinese technology in some key tech sectors. China should also continue to firmly uphold and practice multilateralism and opening-up at the international level, oppose isolationism and protectionism, and promote the development of the global digital economy. 

Authors: Cai Cuihong is a professor at the Center for American Studies at Fudan University. Zhang Ruoyang is a doctoral candidate at the School of International Relations and Public Affairs at Fudan University.

(Source: China Daily)