The EU must choose between protectionism and industrial policy
The recent European mini-tour of Chinese leader Xi Jinping exposed the internal contradictions of the EU’s economic strategy. While in Paris Xi was treated to a litany of complaints about unfair competition from Chinese exports, in Hungary and Serbia he saw Chinese investments being welcomed with open arms. Despite talk of pursuing economic ‘sovereignty’ and ‘strategic autonomy’ in the EU’s economic relations with other powers, Xi’s visit showed just how little Europeans still agree on the meaning of these terms. Generally speaking, ideas in the EU about a more muscular and strategically minded economic policy in recent years run along two tracks: the deployment of protectionist measures against competitive exports from rivals like China in new strategic economic sectors like electric vehicles and green tech; and the use of public subsidies at the EU level to create so-called ‘European champions’ to compete with mega-corporations from the US and China in these areas. Prote...