Commission’s ‘New Industrial Strategy for Europe’ Should Focus More Attention on Countering China

WASHINGTON—Following the European Commission’s unveiling of a “New Industrial Strategy for Europe,” the Information Technology and Innovation Foundation (ITIF), the leading think and for science and technology policy, today released the following statement from ITIF President Robert D. Atkinson:

There is much to commend in the Commission’s proposed industrial strategy, including its focus on encouraging innovation to drive the twin ecological and digital transitions in the economy, and on shifting Europe’s mindset from “risk averse to failure tolerant.” But the strategy frames the economic challenge Europe faces too narrowly around the goal of gaining “digital sovereignty.” The real aim should be to acheive advanced-industry leadership in a broad range of sectors and technologies, not just in the digital sphere. The strategy also contradicts itself by focusing on achieving economic sovereignty for the EU while attempting to maintain a commitment to free trade and global innovation.

The elephant in the room is China. The Commission’s industrial strategy rightly recognizes the need to push back on other governments’ unfair trade practices. But it fails to acknowledge that China is the one deploying the most damaging array of mercantilist tools threatening advanced, innovation-driven idustries. To counter this threat from China, Europe should focus on bolstering “allied sovereignty,” not its own interests in isolation from others’. As an example, the United States isn’t trying to create its own 5G equipment industry; it is considering how to boost European players. Europe should reciprocate in other industries, like Internet and software.

Overall, the Commission’s proposed strategy is forward-looking, and its introduction marks an important inflection point. European policymakers should seize the opportunity to build on the proposal’s strengths while recalibrating its weaknesses.

• For more on an allied response to China, see: Nigel Cory and Robert D. Atkinson, “Why and How to Mount a Strong, Trilateral Response to China’s Innovation Mercantilism” (ITIF, January 2020).