After the 2024 European elections, the EU Commission was pleased with itself. In its view, there were no significant disinformation campaigns surrounding the elections. The presidential election in Romania was a different story. According to the EU Commission at the time, the Romanians had refrained from preparing together with the authority and using the available tools in good time to protect the integrity of the elections.
Germany wants to do things differently. Perhaps a little late, but the really hot phase of the parliamentary election campaign is still to come. A week ago, the Federal Network Agency, as Digital Services Coordinator (DSC), invited the Commission to a round table in Berlin. Together with the Very Large Online Platforms and search engines, they discussed the companies’ obligations under the Digital Services Act (DSA). Representatives from YouTube, Linkedin, Microsoft, Facebook, Instagram, Snapchat, TikTok and X as well as national authorities and civil society organizations sat at the table.
The stress test, known in EU jargon as the Tabletop Exercise, is now taking place today. In a simulated crisis exercise, the players at the round table will run through how they would react to a hypothetical threat or crisis. The aim is to identify weaknesses in existing processes, improve cooperation between those involved, and test response mechanisms. How do I react to an attack by Russian troll armies? Or to manipulated algorithms that, for example, suddenly display nothing in response to the keyword “Democrats”, as was recently the case in the USA?
This “stress test”, in which the participants run through different scenarios, takes place behind closed doors. Let’s hope it helps.
Stay confident!
The five-point plan on asylum and migration policy, which CDU chancellor candidate Friedrich Merz pushed through the Bundestag with the votes of the FDP and AfD, is also causing lively discussions in Brussels. The focus is on the question of whether Merz’s proclaimed national solo effort is covered by European law – and whether it would be compatible with the reform of the Common European Asylum System (CEAS) agreed in 2024.
In the European Parliament, which approved the reform not least in the hope of taking the wind out of the sails of the right-wing populists from the AfD, opinions differ widely. The EU Commission did not want to comment on Merz’s initiative or the legal situation; a question from Table.Briefings remained unanswered. The German debate caused irritation in the Council. However, some EU countries also feel vindicated in their stance.
At a meeting with her counterparts in Warsaw on Thursday, Federal Minister of the Interior Nancy Faeser (SPD) warned against “dangerous national solo efforts“. She also referred to the CEAS reform. “Our top priority remains the fastest possible implementation of the common asylum and migration pact,” Faeser emphasized. She called Merz’s initiative and the vote in the Bundestag irresponsible and oblivious to history.
Migration Commissioner Magnus Brunner (EPP) also urged rapid implementation of the asylum and migration pact. It already contains many points that are now being discussed in Berlin. He also announced an EU amendment for more deportations. “We all know that the previous rules have not really worked,” explained the conservative Austrian. He expressed his “understanding that there is a call to change the rules”.
Austria’s Interior Minister Gerhard Karner also spoke out in favor of more deportations in Warsaw. In contrast, Luxembourg and Spain warned that borders in the Schengen area must remain open as a matter of principle. “We are against controls at the EU’s internal borders,” said Luxembourg’s Interior Minister Léon Gloden. Should Germany apply for an extension of the existing controls, Luxembourg will lodge an objection with the EU Commission.
The Brussels authorities have kept a low profile. In October, the then Commissioner for Home Affairs, Ylva Johansson, responded to a parliamentary question by stating that asylum applications must also be accepted at internal EU borders in order to determine which member state is responsible for processing them. She also emphasized that Article 72 TFEU must be “interpreted narrowly”. It should not be understood as an “authorization” to deviate from the common asylum law.
However, when asked by Table.Briefings, the Commission did not want to confirm this position. Johansson’s response contradicts Merz’s position – he invokes Article 72 to reject asylum seekers at the border even without a check. This article grants the EU member states responsibility “for the maintenance of law and order and the safeguarding of internal security”. However, its interpretation is controversial.
Green MEP Erik Marquardt, who had submitted the written question to the Commission in the fall, reacted with annoyance. “Von der Leyen is not doing her job,” criticized the migration expert. This applies in particular to border controls. “The Schengen rules have not been applied for years. Despite this, the Commission is not reacting – and Merz’s demand for permanent border controls is clearly anti-European.”
Birgit Sippel from the SPD expressed a similar opinion. “It’s embarrassing that former Chancellor Merkel is contradicting us, but nothing is coming from the EU Commission and Ms. von der Leyen. She probably doesn’t dare to make a clear announcement.” Merz’s five-point plan also calls the GEAS reform into question. With his initiative, the CDU leader has taken an axe to the right of asylum, but also to the basic consensus of the democrats.
CDU MEP Lena Düpont, who helped negotiate the CEAS reform, takes the opposite position. “Anyone who claims that Merz’s proposals jeopardize the CEAS reform is wrong,” she told Table.Briefings. It had been clear from the outset that the reform would not cover all aspects of asylum policy. This applied not only to the external dimension, but also in part to the national dimension. Germany could therefore act alone.
“Refoulement at the internal border and detention pending deportation may be compatible with EU law, depending on how it is structured; it is a question of weighing up the options,” said Düpont. At the same time, she conceded that Merz’s plan was “not trivial” in terms of the points relevant to European law. However, it only concerned a few aspects. With a little goodwill, these could certainly be regulated in accordance with EU law. “My plea is always for good communication with the neighboring countries and the Commission,” concluded Düpont.
Ms. Rulf, February 2 is an important date for artificial intelligence in Europe, as the first provisions of the AI Act come into force. What does that mean?
Companies and public authorities must switch off unauthorized applications, so-called “prohibited use cases”, in Europe or are not allowed to put them into operation in the first place. These are, for example, AI applications that are not in line with our European values, such as social scoring. There is also a much more far-reaching provision on AI literacy: companies and authorities are required to equip their employees with at least basic AI knowledge and inform them about the risks.
Does that also happen?
Absolutely. The run-up to the deadline was quite a sprint for many companies. It has led to a boom in training programs. There is a shortage of AI talent across Europe. That’s why many companies want to train their employees themselves.
Was it clear to every company which applications are now prohibited?
No. Recently, so many AI applications have sprung up that it has been very difficult for many companies to find out whether they have unauthorized use cases. One global insurer, for example, took almost six months to find out for sure.
How many systems are banned that were previously used?
The EU Commission has always estimated that only around five percent of all systems on the market are affected by the ban. In practice, banned systems were rarely in use. Either there were already other regulations that prevented their development or use from the outset, or the company’s own value system did not permit their use anyway. The situation is very different with high-risk systems.
Do companies always know which systems their employees are using?
Not always. Shadow IT is often a problem. There are simply things that are practical but not officially permitted. Many employees were very motivated to use new AI technologies, also to simplify their day-to-day work. The legal and compliance departments have often not kept up with the testing fast enough. This is actually often dangerous for companies.
Is the implementation of the AI Act the bureaucratic monster that many are talking about?
It can be a bureaucratic monster if you make it so. But it can also be read as the pragmatic law that it actually wants to be. Establishing good cooperation between the various specialists in the company who are implementing the AI Act is a new challenge in itself. If this can be achieved, then the AI Act is a perfect blueprint for a very good risk management system. But many companies find it very, very difficult to implement the law pragmatically. Many push it into the legal department and then it easily becomes a bureaucratic monster.
What other hurdles do you face?
From an industry perspective, the high-risk systems are actually the more interesting cases. There is also a very clear process for bringing them to market in the form of the conformity assessment. However, there is still a lack of measurable and standardized indicators for implementation.
Where do the key figures for standards have to come from?
This is also still a little unclear. The AI Office has commissioned these standards from the European standardization authority Cen-Cenelec. Companies can have their say, which is a good thing. The problem is that it’s mainly the big tech companies that sit at the table and have the resources to conduct such lengthy, intensive and difficult discussions. So they help write the rules, whereas SMEs are only represented to a limited extent. Once the standards are in place, we also need people to monitor compliance. The Federal Government’s draft bill envisages the Federal Network Agency. It first has to build up the necessary capacities and qualifications.
How problematic is it that the draft bill fell victim to the break in the traffic lights and that nothing is progressing now?
From a business perspective, we need legal clarity as quickly as possible. Our customers operate globally. They can also develop AI elsewhere. They don’t operate in an uncertain legal framework if they don’t have to.
Now that the AI Act is taking effect in Europe, President Donald Trump has wiped federal AI regulation off the table in the US. But there are a number of states that do regulate AI. Are we now in a situation where we have uniform rules in Europe and a patchwork in the USA?
In any case, the narrative that Europe has strict regulation and the USA is unregulated is not true. Some of the regulations in the individual US states are much stricter than the AI Act. They fragment the legal situation considerably. What’s more, the executive order has already been rolled out to 80 percent, including the establishment of authorities, capacities, and mandatory requirements. Withdrawing the order is more of a symbolic act, but in practice, it is unlikely to have a major effect on globally active companies. The signal is: we are deregulating, Europe is regulating. Of course, this has a major pull effect on the market. This should not be underestimated.
The announcement of the Stargate project is also developing such a pull effect. At the same time, China is showing with DeepSeek that AI can also be developed successfully with little money, more creativity, and open source. Where do you see a possible European path to success?
I hear from the industry that, to put it bluntly, computing capacity is of course important. But the AI race is not decided by who has the largest data center, but by who can create the greatest business value from this technology. And that is still the problem. Big tech promises a lot, but on the business side, this value is not yet measurable. The crucial component is what do I do with this technology? Do I have special data? Do I have special business models? Do I have the idea and the courage to use this technology in a transformative way in my company? I can see that Europe still has the potential to be far ahead, because we have many innovative industries.
In a few days, French President Emmanuel Macron is inviting the heads of government to the AI Action Summit in Paris. What do you expect from this summit?
A strong signal for Europe’s AI development. Initiatives in terms of infrastructure and data that will take us a leap forward. I am very curious to see which companies will dare to come out of hiding and join in.
What is your favorite AI application?
Antigone is a chatbot in a CustomGPT that I wrote myself and perhaps somewhat nerdily named after my favorite legendary figure. Antigone is a great sparring partner for my brainstorming sessions. She challenges me because she knows so much herself. She immediately takes my brainstorming to another level.
Kirsten Rulf is a Partner and Associate Director at the Boston Consulting Group in Berlin. Before joining BCG, she was Senior Digital Policy Advisor to Chancellors Angela Merkel and Olaf Scholz and Head of the Digital and Data Department at the Federal Chancellery. In this role, she helped negotiate the AI Act, the Data Protection Act, and other European digital regulations.
The European Investment Bank (EIB) invested a record sum of EUR 89 billion last year. Sixty percent of this was invested in climate-relevant projects. This was announced by the EIB yesterday at the presentation of its annual report. Dual-use financing in the area of security and defense doubled last year, but remained relatively low at one billion euros.
EIB President Nadia Calviño said that the amount of dual-use financing is likely to double in 2025. However, the limiting factor is not the EIB’s reluctance, but a lack of demand for dual-use financing from the private sector. The EIB has made eight billion euros available for dual-use, but only one billion of this has been used.
Last year, the EIB held a roadshow in the member states to encourage more projects in the dual-use sector, said the EIB President. Calviño sidestepped questions about extending the EIB’s mandate to include defense projects, which are currently not eligible for EIB financing. She recalled that she was concerned about sound financing – an allusion to concerns that financing defense investments could affect the bank’s credit rating. “We are not a defense ministry,” Calviño said.
EIB Vice-President Nicola Beer (FDP) also pointed out on Wednesday that the EIB could not take care of Europe’s armament on its own. The main problem, she said, was that the arms industry was not receiving enough orders. Without secure demand, the industry does not want to invest. If the defense ministers increased their order quantities, the industry would also invest in production capacities. According to Beer, normal commercial banks also have sufficient liquidity to meet these financial requirements. jaa
China is currently experiencing its Sputnik moment. Just as the Soviet Union surprised the USA with the first satellite in space in the late 1950s, China’s Sputnik is currently appearing for Europe in the form of artificial intelligence and futuristic, battery-powered vehicles. The Chinese AI start-up DeepSeek is showing the American tech champions Google, Apple and Meta that AI “Made in China” is world-class. The young company has developed an open standard relatively cheaply – R1 is said to have cost less than six million euros. At the same time, it is clear that the US sanctions on chip exports have stimulated Chinese innovation rather than hindering the country in the further development of future-proof technology. A wake-up call – also for Europe.
When the Chinese government presented its Made in China 2025 industrial strategy ten years ago, it caused irritation around the world. At that moment at the latest, it was clear that China’s path to becoming an industrial superpower would cause friction and rivalry with the Western, liberal economic system.
A rethink took place in Washington: Instead of “constructive engagement” with China, strategists in the US government and influential think tanks were now suddenly talking about “strategic competition” or “strategic rivalry”. The trade war launched by the Trump administration in 2018 has made innovation even more important.
The aggressive way in which the US has attacked Chinese companies such as Huawei and ZTE and cut them off from the supply of high-quality semiconductors has led to a hardening of views in Beijing. China is making great financial efforts to reduce its dependence on “unreliable” Western partners. Under the concepts of “dual circulation” and “Indigenous innovation”, China is promoting domestic technology to the increasing exclusion of foreign companies.
Europe does not have the military and technological power of the USA. Nor can and should it imitate the state-controlled subsidy and centralized planning model of the People’s Republic of China. The European Union’s interest is to preserve what made the continent’s economies successful after the Second World War: integrated global value chains with mutual dependencies.
The basis for this was formed by trade relations that were liberal, multilateral, rules-based, and secured by a binding dispute settlement mechanism before the World Trade Organization (WTO). The rise of national protectionism, bilateralism, and the pursuit of self-sufficiency observed in parts of the world presents the EU with a challenge that it must overcome. But Europe’s response to this should not be to become more protectionist. Instead, it should uphold liberal, open values and stand up for them. What specifically needs to be done?
The fragmentation of the European VC market is one of the reasons why there are fewer “unicorns” in Europe overall than in China and the US, i.e. private companies with a value of more than one billion dollars. The national VC markets in Europe do not have a uniform legal framework, which hinders both investment activity and fundraising across borders. Removing barriers to cross-border investment would be an important step towards a more efficient allocation of capital and would help to realize VC return potential.
If Europe wants to survive the technology race against China in the long term, it must also accelerate its pace. To hold its own against China, it needs to develop better ideas and smarter technologies instead of protecting its own economy by retreating into isolation.
There is no doubt that China’s economic and technological rise and the growing rivalry between China and the US will be the biggest challenge for Germany and Europe in the coming years. China has the size and, under its current leadership, the political self-confidence to build an independent, autonomous economic system – a system with Chinese characteristics.
This article is part of the event series “Global China Conversations” organized by the Kiel Institute for the World Economy (IfW). On Thursday (30.01.2025, 14:00, CEST) Jörg Wuttke, Partner at DGA Group/Albright Stonebridge Group in Washington D.C., and Adam S. Posen, President of the Peterson Institute for International Economics, also in Washington D.C., will discuss the topic “How will Trump 2.0 reshape European-Chinese economic relations?” The webinar will be held in English. China.Table is the media partner of this event series.
Editor’s note: Today more than ever, discussing China means debating controversially. We want to reflect the diversity of opinions so that you can gain an insight into the breadth of the debate. Opinion articles do not reflect the opinion of the editorial team.
After the 2024 European elections, the EU Commission was pleased with itself. In its view, there were no significant disinformation campaigns surrounding the elections. The presidential election in Romania was a different story. According to the EU Commission at the time, the Romanians had refrained from preparing together with the authority and using the available tools in good time to protect the integrity of the elections.
Germany wants to do things differently. Perhaps a little late, but the really hot phase of the parliamentary election campaign is still to come. A week ago, the Federal Network Agency, as Digital Services Coordinator (DSC), invited the Commission to a round table in Berlin. Together with the Very Large Online Platforms and search engines, they discussed the companies’ obligations under the Digital Services Act (DSA). Representatives from YouTube, Linkedin, Microsoft, Facebook, Instagram, Snapchat, TikTok and X as well as national authorities and civil society organizations sat at the table.
The stress test, known in EU jargon as the Tabletop Exercise, is now taking place today. In a simulated crisis exercise, the players at the round table will run through how they would react to a hypothetical threat or crisis. The aim is to identify weaknesses in existing processes, improve cooperation between those involved, and test response mechanisms. How do I react to an attack by Russian troll armies? Or to manipulated algorithms that, for example, suddenly display nothing in response to the keyword “Democrats”, as was recently the case in the USA?
This “stress test”, in which the participants run through different scenarios, takes place behind closed doors. Let’s hope it helps.
Stay confident!
The five-point plan on asylum and migration policy, which CDU chancellor candidate Friedrich Merz pushed through the Bundestag with the votes of the FDP and AfD, is also causing lively discussions in Brussels. The focus is on the question of whether Merz’s proclaimed national solo effort is covered by European law – and whether it would be compatible with the reform of the Common European Asylum System (CEAS) agreed in 2024.
In the European Parliament, which approved the reform not least in the hope of taking the wind out of the sails of the right-wing populists from the AfD, opinions differ widely. The EU Commission did not want to comment on Merz’s initiative or the legal situation; a question from Table.Briefings remained unanswered. The German debate caused irritation in the Council. However, some EU countries also feel vindicated in their stance.
At a meeting with her counterparts in Warsaw on Thursday, Federal Minister of the Interior Nancy Faeser (SPD) warned against “dangerous national solo efforts“. She also referred to the CEAS reform. “Our top priority remains the fastest possible implementation of the common asylum and migration pact,” Faeser emphasized. She called Merz’s initiative and the vote in the Bundestag irresponsible and oblivious to history.
Migration Commissioner Magnus Brunner (EPP) also urged rapid implementation of the asylum and migration pact. It already contains many points that are now being discussed in Berlin. He also announced an EU amendment for more deportations. “We all know that the previous rules have not really worked,” explained the conservative Austrian. He expressed his “understanding that there is a call to change the rules”.
Austria’s Interior Minister Gerhard Karner also spoke out in favor of more deportations in Warsaw. In contrast, Luxembourg and Spain warned that borders in the Schengen area must remain open as a matter of principle. “We are against controls at the EU’s internal borders,” said Luxembourg’s Interior Minister Léon Gloden. Should Germany apply for an extension of the existing controls, Luxembourg will lodge an objection with the EU Commission.
The Brussels authorities have kept a low profile. In October, the then Commissioner for Home Affairs, Ylva Johansson, responded to a parliamentary question by stating that asylum applications must also be accepted at internal EU borders in order to determine which member state is responsible for processing them. She also emphasized that Article 72 TFEU must be “interpreted narrowly”. It should not be understood as an “authorization” to deviate from the common asylum law.
However, when asked by Table.Briefings, the Commission did not want to confirm this position. Johansson’s response contradicts Merz’s position – he invokes Article 72 to reject asylum seekers at the border even without a check. This article grants the EU member states responsibility “for the maintenance of law and order and the safeguarding of internal security”. However, its interpretation is controversial.
Green MEP Erik Marquardt, who had submitted the written question to the Commission in the fall, reacted with annoyance. “Von der Leyen is not doing her job,” criticized the migration expert. This applies in particular to border controls. “The Schengen rules have not been applied for years. Despite this, the Commission is not reacting – and Merz’s demand for permanent border controls is clearly anti-European.”
Birgit Sippel from the SPD expressed a similar opinion. “It’s embarrassing that former Chancellor Merkel is contradicting us, but nothing is coming from the EU Commission and Ms. von der Leyen. She probably doesn’t dare to make a clear announcement.” Merz’s five-point plan also calls the GEAS reform into question. With his initiative, the CDU leader has taken an axe to the right of asylum, but also to the basic consensus of the democrats.
CDU MEP Lena Düpont, who helped negotiate the CEAS reform, takes the opposite position. “Anyone who claims that Merz’s proposals jeopardize the CEAS reform is wrong,” she told Table.Briefings. It had been clear from the outset that the reform would not cover all aspects of asylum policy. This applied not only to the external dimension, but also in part to the national dimension. Germany could therefore act alone.
“Refoulement at the internal border and detention pending deportation may be compatible with EU law, depending on how it is structured; it is a question of weighing up the options,” said Düpont. At the same time, she conceded that Merz’s plan was “not trivial” in terms of the points relevant to European law. However, it only concerned a few aspects. With a little goodwill, these could certainly be regulated in accordance with EU law. “My plea is always for good communication with the neighboring countries and the Commission,” concluded Düpont.
Ms. Rulf, February 2 is an important date for artificial intelligence in Europe, as the first provisions of the AI Act come into force. What does that mean?
Companies and public authorities must switch off unauthorized applications, so-called “prohibited use cases”, in Europe or are not allowed to put them into operation in the first place. These are, for example, AI applications that are not in line with our European values, such as social scoring. There is also a much more far-reaching provision on AI literacy: companies and authorities are required to equip their employees with at least basic AI knowledge and inform them about the risks.
Does that also happen?
Absolutely. The run-up to the deadline was quite a sprint for many companies. It has led to a boom in training programs. There is a shortage of AI talent across Europe. That’s why many companies want to train their employees themselves.
Was it clear to every company which applications are now prohibited?
No. Recently, so many AI applications have sprung up that it has been very difficult for many companies to find out whether they have unauthorized use cases. One global insurer, for example, took almost six months to find out for sure.
How many systems are banned that were previously used?
The EU Commission has always estimated that only around five percent of all systems on the market are affected by the ban. In practice, banned systems were rarely in use. Either there were already other regulations that prevented their development or use from the outset, or the company’s own value system did not permit their use anyway. The situation is very different with high-risk systems.
Do companies always know which systems their employees are using?
Not always. Shadow IT is often a problem. There are simply things that are practical but not officially permitted. Many employees were very motivated to use new AI technologies, also to simplify their day-to-day work. The legal and compliance departments have often not kept up with the testing fast enough. This is actually often dangerous for companies.
Is the implementation of the AI Act the bureaucratic monster that many are talking about?
It can be a bureaucratic monster if you make it so. But it can also be read as the pragmatic law that it actually wants to be. Establishing good cooperation between the various specialists in the company who are implementing the AI Act is a new challenge in itself. If this can be achieved, then the AI Act is a perfect blueprint for a very good risk management system. But many companies find it very, very difficult to implement the law pragmatically. Many push it into the legal department and then it easily becomes a bureaucratic monster.
What other hurdles do you face?
From an industry perspective, the high-risk systems are actually the more interesting cases. There is also a very clear process for bringing them to market in the form of the conformity assessment. However, there is still a lack of measurable and standardized indicators for implementation.
Where do the key figures for standards have to come from?
This is also still a little unclear. The AI Office has commissioned these standards from the European standardization authority Cen-Cenelec. Companies can have their say, which is a good thing. The problem is that it’s mainly the big tech companies that sit at the table and have the resources to conduct such lengthy, intensive and difficult discussions. So they help write the rules, whereas SMEs are only represented to a limited extent. Once the standards are in place, we also need people to monitor compliance. The Federal Government’s draft bill envisages the Federal Network Agency. It first has to build up the necessary capacities and qualifications.
How problematic is it that the draft bill fell victim to the break in the traffic lights and that nothing is progressing now?
From a business perspective, we need legal clarity as quickly as possible. Our customers operate globally. They can also develop AI elsewhere. They don’t operate in an uncertain legal framework if they don’t have to.
Now that the AI Act is taking effect in Europe, President Donald Trump has wiped federal AI regulation off the table in the US. But there are a number of states that do regulate AI. Are we now in a situation where we have uniform rules in Europe and a patchwork in the USA?
In any case, the narrative that Europe has strict regulation and the USA is unregulated is not true. Some of the regulations in the individual US states are much stricter than the AI Act. They fragment the legal situation considerably. What’s more, the executive order has already been rolled out to 80 percent, including the establishment of authorities, capacities, and mandatory requirements. Withdrawing the order is more of a symbolic act, but in practice, it is unlikely to have a major effect on globally active companies. The signal is: we are deregulating, Europe is regulating. Of course, this has a major pull effect on the market. This should not be underestimated.
The announcement of the Stargate project is also developing such a pull effect. At the same time, China is showing with DeepSeek that AI can also be developed successfully with little money, more creativity, and open source. Where do you see a possible European path to success?
I hear from the industry that, to put it bluntly, computing capacity is of course important. But the AI race is not decided by who has the largest data center, but by who can create the greatest business value from this technology. And that is still the problem. Big tech promises a lot, but on the business side, this value is not yet measurable. The crucial component is what do I do with this technology? Do I have special data? Do I have special business models? Do I have the idea and the courage to use this technology in a transformative way in my company? I can see that Europe still has the potential to be far ahead, because we have many innovative industries.
In a few days, French President Emmanuel Macron is inviting the heads of government to the AI Action Summit in Paris. What do you expect from this summit?
A strong signal for Europe’s AI development. Initiatives in terms of infrastructure and data that will take us a leap forward. I am very curious to see which companies will dare to come out of hiding and join in.
What is your favorite AI application?
Antigone is a chatbot in a CustomGPT that I wrote myself and perhaps somewhat nerdily named after my favorite legendary figure. Antigone is a great sparring partner for my brainstorming sessions. She challenges me because she knows so much herself. She immediately takes my brainstorming to another level.
Kirsten Rulf is a Partner and Associate Director at the Boston Consulting Group in Berlin. Before joining BCG, she was Senior Digital Policy Advisor to Chancellors Angela Merkel and Olaf Scholz and Head of the Digital and Data Department at the Federal Chancellery. In this role, she helped negotiate the AI Act, the Data Protection Act, and other European digital regulations.
The European Investment Bank (EIB) invested a record sum of EUR 89 billion last year. Sixty percent of this was invested in climate-relevant projects. This was announced by the EIB yesterday at the presentation of its annual report. Dual-use financing in the area of security and defense doubled last year, but remained relatively low at one billion euros.
EIB President Nadia Calviño said that the amount of dual-use financing is likely to double in 2025. However, the limiting factor is not the EIB’s reluctance, but a lack of demand for dual-use financing from the private sector. The EIB has made eight billion euros available for dual-use, but only one billion of this has been used.
Last year, the EIB held a roadshow in the member states to encourage more projects in the dual-use sector, said the EIB President. Calviño sidestepped questions about extending the EIB’s mandate to include defense projects, which are currently not eligible for EIB financing. She recalled that she was concerned about sound financing – an allusion to concerns that financing defense investments could affect the bank’s credit rating. “We are not a defense ministry,” Calviño said.
EIB Vice-President Nicola Beer (FDP) also pointed out on Wednesday that the EIB could not take care of Europe’s armament on its own. The main problem, she said, was that the arms industry was not receiving enough orders. Without secure demand, the industry does not want to invest. If the defense ministers increased their order quantities, the industry would also invest in production capacities. According to Beer, normal commercial banks also have sufficient liquidity to meet these financial requirements. jaa
China is currently experiencing its Sputnik moment. Just as the Soviet Union surprised the USA with the first satellite in space in the late 1950s, China’s Sputnik is currently appearing for Europe in the form of artificial intelligence and futuristic, battery-powered vehicles. The Chinese AI start-up DeepSeek is showing the American tech champions Google, Apple and Meta that AI “Made in China” is world-class. The young company has developed an open standard relatively cheaply – R1 is said to have cost less than six million euros. At the same time, it is clear that the US sanctions on chip exports have stimulated Chinese innovation rather than hindering the country in the further development of future-proof technology. A wake-up call – also for Europe.
When the Chinese government presented its Made in China 2025 industrial strategy ten years ago, it caused irritation around the world. At that moment at the latest, it was clear that China’s path to becoming an industrial superpower would cause friction and rivalry with the Western, liberal economic system.
A rethink took place in Washington: Instead of “constructive engagement” with China, strategists in the US government and influential think tanks were now suddenly talking about “strategic competition” or “strategic rivalry”. The trade war launched by the Trump administration in 2018 has made innovation even more important.
The aggressive way in which the US has attacked Chinese companies such as Huawei and ZTE and cut them off from the supply of high-quality semiconductors has led to a hardening of views in Beijing. China is making great financial efforts to reduce its dependence on “unreliable” Western partners. Under the concepts of “dual circulation” and “Indigenous innovation”, China is promoting domestic technology to the increasing exclusion of foreign companies.
Europe does not have the military and technological power of the USA. Nor can and should it imitate the state-controlled subsidy and centralized planning model of the People’s Republic of China. The European Union’s interest is to preserve what made the continent’s economies successful after the Second World War: integrated global value chains with mutual dependencies.
The basis for this was formed by trade relations that were liberal, multilateral, rules-based, and secured by a binding dispute settlement mechanism before the World Trade Organization (WTO). The rise of national protectionism, bilateralism, and the pursuit of self-sufficiency observed in parts of the world presents the EU with a challenge that it must overcome. But Europe’s response to this should not be to become more protectionist. Instead, it should uphold liberal, open values and stand up for them. What specifically needs to be done?
The fragmentation of the European VC market is one of the reasons why there are fewer “unicorns” in Europe overall than in China and the US, i.e. private companies with a value of more than one billion dollars. The national VC markets in Europe do not have a uniform legal framework, which hinders both investment activity and fundraising across borders. Removing barriers to cross-border investment would be an important step towards a more efficient allocation of capital and would help to realize VC return potential.
If Europe wants to survive the technology race against China in the long term, it must also accelerate its pace. To hold its own against China, it needs to develop better ideas and smarter technologies instead of protecting its own economy by retreating into isolation.
There is no doubt that China’s economic and technological rise and the growing rivalry between China and the US will be the biggest challenge for Germany and Europe in the coming years. China has the size and, under its current leadership, the political self-confidence to build an independent, autonomous economic system – a system with Chinese characteristics.
This article is part of the event series “Global China Conversations” organized by the Kiel Institute for the World Economy (IfW). On Thursday (30.01.2025, 14:00, CEST) Jörg Wuttke, Partner at DGA Group/Albright Stonebridge Group in Washington D.C., and Adam S. Posen, President of the Peterson Institute for International Economics, also in Washington D.C., will discuss the topic “How will Trump 2.0 reshape European-Chinese economic relations?” The webinar will be held in English. China.Table is the media partner of this event series.
Editor’s note: Today more than ever, discussing China means debating controversially. We want to reflect the diversity of opinions so that you can gain an insight into the breadth of the debate. Opinion articles do not reflect the opinion of the editorial team.
