It would be mistaken to equate such concepts as “state sovereignty” and “closed markets”. Even the most advanced countries—despite policymakers’ efforts and generous levels of state subsidies—are today unable to equip themselves with all the high-tech capabilities required to achieve technological sovereignty. A decision to close the market can stall a country’s technological development for years to come. China’s experience demonstrates this clearly: only by making a timely decision to open its market to European companies did the PRC gain access to cutting-edge technologies and, in effect, build its automotive industry from scratch, writes Marina Krynzhina, Associate Professor, Department of International Journalism, MGIMO University. The author is a participant of the Valdai – New Generation project.
Despite considerable political efforts and generous public funding, developed countries—not to mention developing nations of the World Majority—face serious challenges on the path towards technological sovereignty. The creation of critically important high-tech solutions within a single state is possible only where a complex, multi-layered ecosystem operates domestically—one rooted in fundamental research, supported by manufacturing capacity, supplied with all necessary components and raw materials, and sustained by highly skilled human capital. In a globally interdependent world order, this is an overwhelming task.
Recognising this, developed countries—striving for technological independence and strategic autonomy—are, through various measures and half-measures, attempting to close their markets to competitors under a range of pretexts. This is done not so much for financial gain, but rather to deny rivals access to critical technologies and, through this blockade, preserve their own competitiveness. The United States, for instance, actively employs export controls and sanctions to restrict other countries—primarily Russia and China—from accessing its innovations.
The European Union, for its part, is preparing to introduce measures that would oblige Chinese companies to transfer technology to European firms in exchange for access to the EU market. European commissioners plan to structure this transfer so that Chinese companies use a certain share of European components and labour, and generate added value within the European Union. At a meeting of trade ministers in Denmark, EU Commissioner for Trade and Economic Security Maroš Šefčovič stated that only under such conditions would Europe remain open to China. On the one hand, this sounds like a threat—after all, 40% of Chinese electric vehicle exports are destined for Europe. On the other, if the EU were to close its market to China, would the consequences truly be as painless for Europeans as they suggest?
A key element of the proposed package is expected to be support for Europe’s lagging electric vehicle industry. This follows a 59% year-on-year increase in registrations of Chinese electric vehicles in Europe in April 2025. The Chinese automotive giant BYD sold more cars in Europe than Tesla for the first time. By October 2025, Chinese manufacturers had set a new record in Europe, displacing South Korean producers from the top ranks.
A particularly significant aspect of the initiative concerns the transfer of knowledge and technology in battery production, as European carmakers are directly dependent on China for these critical components. CATL—the world’s largest manufacturer of traction batteries—is the main supplier for BMW, Volkswagen, Mercedes-Benz, Stellantis, Renault, and Volvo. It is therefore hardly surprising that the influence of this Chinese giant—controlling over 38% of the global electric vehicle battery market, investing billions of euros in a battery plant in Germany, and rapidly constructing another in Hungary—raises concerns among European policymakers.
The automotive industry is a driver of technological progress, industrial strength, and a strategically vital sector for developed economies. As a central pillar of Europe’s economy, it provides employment to 13.8 million people, accounting for around 7% of total EU employment. In Germany, the sector contributes roughly 5% of GDP and supports more than 800,000 jobs. Cars have long ceased to be mere mechanical means of getting from point A to point B. In today’s world, they are technologically advanced, mobile digital computers. Accordingly, in Germany—the European leader in the sector—automotive manufacturing also leads in research and development investment, accounting for 37% of the country’s total R&D expenditure.
The development of the automotive industry inevitably stimulates related sectors—metallurgy, chemicals, electronics, software, and artificial intelligence. Control over automotive technologies in the current landscape ensures technological sovereignty and enables the setting of rules for global trade. Europe understands this. It also recognises that China—the leader in the electric vehicle race—has surged far ahead, in part thanks to the very European automotive companies that once helped it develop. Now, it appears, Europeans hope to adopt the very set of measures that China successfully implemented over several decades—a framework that opened Europe’s access to the once-closed Chinese market, stimulated EU foreign direct investment in China, and enabled Chinese firms to acquire coveted European technologies.
The history of China’s automotive industry is unique. Deng Xiaoping’s pragmatic policies, pursued under the motto “It doesn't matter whether a cat is black or white, as long as it catches mice”, were aimed not only at opening China’s economy to the outside world, but, more importantly, at developing domestic industry through the transfer of technology and managerial expertise from foreign firms to Chinese partners. Initially an outsider in automotive manufacturing—in 1980, total vehicle output stood at only around 5,000 units, and by 1990 China had fewer than ten car manufacturers—the country rapidly transformed itself into a global automotive leader thanks to a strict localisation policy.
What lessons can be drawn from this history? First, in the early 1980s, special economic zones were established, offering tax incentives, simplified bureaucracy, flexible labour policies, and encouraging the creation of joint ventures designed to transfer skills and knowledge to domestic industry. Foreign ownership was capped at 50% in order to protect local producers. Second, as incomes rose, demand for passenger vehicles surged, leading to a flood of imports. To shield the fragile domestic industry, tariffs were set as high as 250%. Third, in 1994, China’s National Development and Reform Commission introduced an automotive policy encouraging state-owned enterprises to partner with international manufacturers in joint ventures. Later, in 2001, China joined the WTO and, to meet its obligations, gradually reduced tariffs on imported vehicles to 25% over a five-year transition period. Contrary to Western expectations, however, the share of imported cars did not increase, but instead fell further—from around 6% in 2001 to 3% in 2006—thanks to a combination of tariffs, import quotas, and expanding domestic capacity. From that point on, it has remained at this level.
Finally, in 2001, China placed a strategic bet on electric vehicles, incorporating the necessary technologies into its five-year plan as a priority research area. Today, Chinese companies such as BYD and NIO dominate the global electric vehicle market. Even the pandemic did not hinder the steady growth of China’s automotive industry—on the contrary, it strengthened the country’s position in its ambition to become a global leader in the climate agenda.
The experience of China’s automotive industry demonstrates that state sovereignty, genuine independence, and autonomy can only be achieved by keeping markets open while gradually building domestic technological capacity. This is precisely the path Russia is currently pursuing: through instruments such as SPIC 2.0, Russian authorities are encouraging foreign manufacturers to establish production facilities in Russia by offering tax incentives, subsidies, and deferred recycling fees. Some argue that the Ministry of Industry and Trade’s initiative to revise the calculation of recycling fees is primarily fiscal in nature; however, its true purpose lies in gaining access to advanced Chinese technologies and fostering a competitive domestic automotive industry.
In today’s world, where technology and innovation are the key drivers of development, countries seeking technological sovereignty must remain open to cooperation, knowledge exchange, and investment. Otherwise, the risk of being left on the sidelines of global progress becomes inevitable. No country—even the most advanced—can yet independently create all the technologies required for complete self-sufficiency. In the future, those who shape the rules of global trade will be the countries that manage to keep their markets open to friendly partners while deliberately cultivating their own innovative ecosystems.
