Fragmented Europe: Dealing with China as a technology and innovation power

A report by the European Think-tank Network on China (ETNC)

Edited by: Bernhard Bartsch, Claudia Wessling
Peer reviews by: Andreas B. Forsby, Nick Nieschalke, John Seaman, Tamás Matura, Francesca Maremonti, Aurelio Insisa, Matej Šimalčík, Filip Šebok, Anastas Vangeli, Katja Zajc Kejžar, Mario Esteban, Miriam Tardell

China’s drive to become a global leader in science, technology and innovation has huge implications for the EU and its member states. On the one hand, China is becoming a strong competitor in industrial high-tech sectors and innovative science that used to be the stronghold of European actors. Advanced digital technologies made in China also increasingly pose risks to infrastructures in Europe. On the other hand, China offers itself as a resourceful counterpart for collaboration in research and development (R&D) and keeps attracting European scientists and businesses alike.

This report, the 12th compiled by the European Think-tank Network on China (ETNC), analyses how Europe is affected by China’s rise to a technological power and its increasing clout in shaping and creating innovation. Authors from 22 European countries have contributed to this study. The goal is to provide a nuanced picture of how those states interact with China in the field of innovative technologies, and to identify commonalities and differences in how they are affected.

Estonia: Unenthusiastic about tech relations with China, yet Huawei remains and Pony.ai arrives

Chapter by Toomas Hanso (ICDS)

Over the past ten years, Estonia’s engagement with China in tech and innovation has shifted from positive to negative. An inflection point is marked by 2019, when the EU designated China a systemic rival, and Estonia signed the 5G memorandum with the US. Negative momentum has been compounded by China’s support for Russia in its war against Ukraine, which likely caused Estonia to exit China’s 16+1 cooperation format and end BRI collaboration. Yet there has not been a full decoupling, despite the Estonian Foreign Intelligence Service (EFIS)’s repeated warnings of the risks of using Chinese technology. While Huawei has been banned from 5G infrastructure, Huawei photovoltaic inverters remain embedded in Estonia’s energy infrastructure, and in December 2025 Estonia’s Bolt announced a partnership with China’s Pony.ai in self-driving technology. This highlights a divergence in the recommendations made by national security apparatus, and decisions made by the business community.

The European Think-tank Network on China (ETNC) is a gathering of China experts from a selection of European policy research institutes. It is devoted to the policy-oriented study of Chinese foreign policy and relations between China and European countries as well as China and the EU.