
Policymakers on both sides of the Atlantic now frame China primarily not as an opportunity but as a challenge or threat. In recent research with colleagues at the U.K.’s leading foreign policy think tanks — Chatham House and the Royal United Services Institute — into transatlantic cooperation on China, we found consensus on the need for de-risking; on the desire to maintain the security status quo in the Indo-Pacific; and on the need to counter China’s actions on the world stage and its alternative vision for world order. However, our workshops with public officials and experts in London, Berlin and Washington, DC highlighted much less agreement on specific policy trade-offs and implementation. Just six weeks after the U.S. launched an investigation into the potential security risks posed by Chinese ‘smart cars’, for example, German Chancellor Scholz’s visit to Beijing this month saw agreement with China to cooperate on data-sharing in connected vehicles.


Left: An excerpt from a statement released by the White House on “Addressing National Security Risks to the U.S. Auto Industry”, February 29, 2024. Right: Germany’s Federal Chancellor Olaf Scholz meets with Xi Jinping in Beijing, April 16, 2024. Credit: The White House, Federal Government/Kugler
Cooperation and joint action between Western countries can bring benefits. Policies such as export controls become more effective. Burden-sharing makes costs more manageable. But broad-brush agreement that ignores underlying differences provides at best a fragile basis for cooperation. The outcome of the U.S. election may test further this fragility. Policy objectives, the domestic context, and assessments of the scale and urgency of the China challenge, all differ between countries. Just as policymakers need to be ‘clear-eyed’ about China, so too they must be clear-eyed about differences between even ‘like-minded’ countries. Such clarity provides the basis for more resilient cooperation, based on complementarity, negotiation and national interests. Across economics, security and global governance, changes in the geopolitical landscape require just such an approach.

Recent decades have seen an economic model anchored predominantly in market-based competition between globalizing companies. Countries have cooperated to design and enforce the ‘rules of the game’. This model has shifted and will shift further — in part, the consequence of China’s economic success and its own, different, policy choices. The U.S. and Europe share concerns about the threat that ever-increasing Chinese exports and innovation pose to jobs and to their industrial base. The U.S. Inflation Reduction Act (IRA), the CHIPS and Science Act and the EU Chips Act confirm that industrial policy is back. This response itself tilts the balance from cooperation between countries towards competition. “Well, I think we forgot you” are the reported words of U.S. Treasury Secretary Janet Yellen to German Economy Minister Robert Habeck, when he raised the impact of the IRA on European automakers.
In this new competition, countries are drawing different conclusions on the role that China should play. Competitive, commercial engagement with China — for market access and for investment and technology flows – has picked up steam again. Governments from the U.S., France, Germany and elsewhere have all led national business delegations to China in recent months. While initiating dumping investigations and debating tariffs, many Europeans want in parallel to attract investment and learn from China in electric vehicles and other new technologies. For the U.S., the impulse to shut out Chinese competitors, for reasons of jobs and national security, seems at the moment stronger.
By contrast, security concerns have the potential to bring the transatlantic partners together. NATO is, after all, the supreme example of enduring cooperation in the face of an external security threat. Alongside traditional ‘hard’ military security, non-traditional security in general and economic security in particular is now more in focus.
Practical, lasting cooperation requires disentangling where assessments of China differ and where it is national interests that differ, for reasons of policy objectives, economic standing, geography and history.
But addressing security concerns — separately or together — has costs. And it is individual, nation-based assessments of the nature, scale and urgency of these concerns that determine the willingness to bear these costs. Despite G-7 agreement on “de-risking”, the word means different things in different countries. As the leading global power, the U.S. seeks to maintain “as large a lead as possible” in key technologies, especially those with military applications. Increasingly it views the rebuilding of American manufacturing capabilities as a security imperative as much as an economic one. By contrast, many European countries focus instead on resilience and diversifying their economic relationship with China, while remaining comfortable that China, though a competitor, can contribute to their own technology upgrading.
The blend of economics and security in ‘economic security’ makes cooperation even more challenging. In the absence of imminent, unarguable threat — as in Russia’s invasion of Ukraine — differing national interests and the need to agree who bears which costs make it hard to get general commitments to work, within the EU itself and across the Atlantic. Targeted approaches to the most critical situations, with the U.S. willing to push hard, are the most likely to stick — as in the case of Dutch semiconductor equipment manufacturer, ASML.

In the traditional security domain too, beneath the shared desire to maintain the status quo in the Indo-Pacific, our workshops identified significant differences. For the Pentagon, China is the ‘pacing challenge’. Many participants from the U.S. felt that European governments were too optimistic about avoiding conflict over Taiwan. This divergence has little impact on the hard security response, given the U.S.’s dominant military role in the region. However, deterrence around Taiwan rests also on sustained non-traditional security measures and on clear, credible preparation for, and communication of, the economic consequences for China of a move on Taiwan.
Enhanced cooperation has great value here. Wider sharing of classified U.S. security assessments may help, together with punchy analysis of the economic impact on Europe of disruptions to Taiwan and regional supply chains. But ultimately, to invest more effort, European countries need to believe the costs of not acting now are greater than the costs of doing so — and agree on what actions are most productive. Any U.S. linkage of its military support in Europe to European support on Taiwan may change calculations. For now, however, the direct Russia threat looms larger.
In the arena of global governance and norms, our workshops again found transatlantic agreement overall and divergence on the specifics.
The U.S. and Europe have both done less than China to propose an updated vision of global governance that appeals to the Global South. China offers an endgame of a ‘multipolar’ world and all-embracing initiatives for Security, Development and Civilization, ambiguous in meaning, but not without appeal. By contrast, there is little clarity across the Atlantic about the desired endgame in security and global governance. Are there areas where, depending on China’s own stance, working together with China on security is desirable and feasible? Or is the original Cold War destined to be an increasingly accurate analogy? How and where can the transatlantic partners work with China on global governance? Or is the future one inevitably of sustained competition to shape multilateral institutions and secure key appointments, while creating separate, parallel architectures?
Formulating and debating at least initial responses to these questions will help clarify critical choices on China policy on both sides of the Atlantic. Practical, lasting cooperation requires disentangling where assessments of China differ and where it is national interests that differ, for reasons of policy objectives, economic standing, geography and history. The transatlantic partners should seek to build alignment where possible and accept divergence where necessary. Whoever is in power, this requires leadership rooted in direct communication and negotiation about who bears which costs and reaps which benefits from the policies pursued.

Andrew Cainey is a senior associate fellow at the Royal United Services Institute, the world’s oldest defense and security think tank and a founding director of the U.K. National Committee on China. In his recently published book, Xiconomics: What China’s Dual Circulation Strategy Means for Global Business – written together with Christiane Prange – he analyzes the changing business environment for foreign business in China under Xi Jinping and the strategies that multinationals now need to pursue.