Sino-European joint ventures and the risk of technology transfers

High-tech joint ventures are a key element in EU-China economic relations. They can serve as a conduit for technology transfers from Europe to China, enabling China's industrial agenda but also potentially weakening the EU's ambitions to pursue 'strategic autonomy'. This research seeks to understand the degree to which Sino-European joint ventures play a role in facilitating technology transfers in strategic industrial sectors.

High-tech plays a central role in the growing geopolitical competition among the world's great powers. The Chinese government, especially through its 'Made in China 2025' strategy, has made its industrial and geopolitical objectives clear, fueling concerns that European firms are inadvertently helping China to meet its strategic ambitions at the expense of European ones. Of course, not all joint ventures are vehicles for technology transfer, or are of strategic economic concern, but some are. And some of those involve technology transfers of technologies that are relevant to the security and geopolitical interests of the EU.

We sampled a group of twenty Sino-European joint ventures from a database drawn from Datenna's database of EU-ChinaJoint Ventures and wholly foreign owned entities in China.

We found that:

• Sino-European joint ventures are active in each of the ten 'Made in China 2025' technological sectors;
• In 80 per cent of the joint ventures in our sample, the European parent company has a minority stake;
• In 25 per cent of the cases, the involvement of the Chinese state in the joint venture is considered to be 'high';
• In 25 per cent of the cases, technology transfer is considered to be a 'likely' element of the joint venture's activities.

The European Union and its member-states should better understand the nature of Sino-European joint ventures and the risks involved with technology transfers to China. It should develop policy to avoid joint ventures from enabling China's strategic agenda at Europe's industrial and geopolitical expense. The Clingendael-Datenna Initiative on Sino-European Strategic Dependencies aims to support this effort with independent policy analysis and research.

Clingendael-Datenna joint Alert, co-authored with Rem Korteweg, Demi Donninger, Vera Kranenburg and Camilla Caberlon. Click on the image below to go to the report.