Europe’s green transition impossible without China, says Dutch minister

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Europe’s green transition will be impossible without China, the Dutch trade minister has warned, as the EU tries to unravel some of its economic dependence on the Asian powerhouse.

Western economies face the dilemma of reducing their dependence on Chinese supply chains while overseeing an increase in domestic demand for clean technologies such as solar power and car batteries, an industry dominated by companies based in China. As the US decouples from China, Europe has so far proceeded more cautiously as its economy is more dependent on Asia and is already reeling from the bloc’s shutdown on imports of energy and raw materials from Russia after the invasion of Ukraine by Vladimir Putin.

“They do a lot [research and development] and it would be a real shame if we completely decoupled from China,” Liesje Schreinemacher told the Financial Times. The minister said the Netherlands had a “strong business relationship with China” and that “we need each other to make our economies more sustainable and the transition green.”

Last week, G7 leaders of the world’s largest economies agreed to “de-risk” their relationship with China by seeking to import more critical raw materials from other sources and developing domestic clean-tech industries. .

Schreinemacher, who will travel to China before the end of the year with a trade delegation, said “decreasing our strategic dependencies does not mean we should completely stop trade as long as we diversify our sources and diversify our value chains.” .

In March, the EU presented plans to further target the domestic extraction and processing of critical materials. Next month, European Commission President Ursula von der Leyen will unveil an economic security strategy, despite fears from some member states that the bloc is taking a protectionist turn. China controls nearly the entire global solar power supply chain and much of the world’s processing capacity for minerals critical to the green transition.

Schreinemacher said the EU should think carefully before screening EU investment in Chinese cutting-edge technology, an issue that has also been raised. discussed by G7 leaders this month. She described the so-called outward investment screening as a “very cumbersome instrument” to use to protect the bloc’s economic interests. “We think it’s very important that we know exactly what its purpose is and how it can be executed,” she said.

She also stressed that economic security powers remained in the hands of national governments, in reference to pressure from Washington for Europe to mirror its aggressive stance by limiting trade ties with China.

US and EU officials, including Secretary of State Antony Blinken, will discuss outbound investment screening and coordinated export controls at a meeting on May 31, according to a draft statement seen by the FT. The discussions will seek to increase “our understanding of the policy tools available to address national security risks holistically,” the text reads.

The Hague and Tokyo have joined Washington in banning the export of the most sensitive silicon chip-making technology to China, especially as Beijing has stepped up pressure on Taiwan, the world’s semiconductor manufacturing hub. -drivers.

The Dutch government has announced that the most advanced chip-making machines will require an export license, without specifying which models. Schreinemacher said she would provide more details “by the summer.”

Brakes hit Dutch society ASML, the only producer of advanced machinery in the EU. But Schreinemacher wants Brussels to approve the measures so that other member states can follow suit and commit not to re-export Dutch-made equipment.

“It would be more of a show of support for these measures,” she said.

China retaliated to the United States by banning the use of chips manufactured by Micron in infrastructure projects.

Schreinemacher declined to speculate on whether Dutch companies could face similar action after Beijing threatened retaliation.

Additional reporting by Javier Espinosa in Brussels