Key facts
- China's 15th Five-Year Plan emphasizes technological self-reliance by 2030.
- European firms are crucial suppliers for China in semiconductors, aerospace, pharmaceuticals, automotive chips, robotics, and quantum computing.
- ASML's EUV lithography machines are essential for advanced chip manufacturing, with China still reliant on less advanced DUV machines.
- European companies supply critical components for China's Comac C919 aircraft and robotics sector.
- Europe leads in pharmaceutical patents and vaccine market share, while China rapidly increases R&D investment.
- Chinese automakers depend on European chips, but Europe has vulnerabilities in chip back-end manufacturing.
- China's monopoly on rare earths is seen as a more powerful leverage point than Europe's technological dependencies.
China's pursuit of technological self-reliance, outlined in its 15th Five-Year Plan, faces significant hurdles due to ongoing dependencies on European suppliers in strategic sectors. Despite Beijing's efforts to close the gap in areas like semiconductors, aerospace, pharmaceuticals, automotive chips, robotics, and quantum computing, European companies continue to provide essential products and technologies.
In semiconductors, the Dutch firm ASML holds a near-monopoly on the extreme ultraviolet (EUV) lithography machines crucial for advanced chip manufacturing. While sales of these machines to China are restricted, Beijing can still acquire less advanced deep ultraviolet (DUV) machines, where ASML also has a dominant market share. China aims for domestic chip production by 2028 but still requires ASML's expertise for learning and maintenance.
The aerospace sector sees European companies like France's Safran, Germany's Liebherr Aerospace, and Italy's Avio Aero providing critical engine and cabin components for China's Comac C919 airliner. Without their involvement, China's civil aviation program would be significantly hampered. However, weaponizing this supply chain could impact European suppliers' revenues.
Europe also maintains a lead in pharmaceutical patents and vaccine market share, though China's R&D investment is rapidly increasing. In medical equipment, companies like Siemens Healthineers and Philips are global leaders in MRI technology, with key upstream components still sourced from Europe.