Changes from report parliamentary committee draft to plenary report

Added8. Strongly advocates for the diversification of suppliers and partners in critical infrastructure initiatives to reduce the vulnerability to external influences, ensuring that reliance on any single source is minimised;

Added9. Is concerned that privately owned undersea cables provided by Chinese companies, such as HMN Technologies, a PLA cyber intelligence–affiliated entity, are used to support EU and Member States’ diplomatic and military communications; expresses its grave concern over the undersea data cable systems operated by Chinese company HMN Technologies, which connect EU Member States’ territories and the Indo-Pacific region, including Member State and NATO military bases, creating security vulnerabilities as regards cybersecurity, underwater surveillance, data collection, and gathering of intelligence; in this regard, is further concerned by the sale of a Dutch company, the backbone of Estonia’s internet infrastructure, to a Chinese company linked to the PLA; highlights the need for a joint effort among the Member States to prevent similar cases;

Added10. Recalls the need to perform a thorough evaluation of the EU institutions’ information security infrastructure and services, in particular regarding classified communications between the institutions and missions and operations abroad; recalls that the full supply chain should be taken into account to ensure that the companies do not have any direct or indirect links with the PRC; calls for specific provisions in EU institutions procurements procedures to limit the risk of interference, including the acquisition, maintenance or vetting by a third party;

Added11. Warns that major investments in seaports, railways and airports give Beijing the opportunity to monitor and control activities in key logistical nodes with a fundamental strategic dimension;

Added12. Highlights the fact that, in 2022, China was the EU’s second largest trading partner for goods; expresses concern about the increasingly imbalanced trade and investment relationship between the EU and China, which is also highlighted by the EU’s record trade deficit of EUR 396 billion in 2022 and its dependence on Chinese imports and investments in some critical sectors; highlights China’s imbalanced international trade policy in the context of its dual circulation strategy; asks the Commission to raise the EU’s concerns with China on its managed trade practices;

Developing responses: expanding the toolkit to respond to security and defence concerns

Change 9

Removed7. Warns that the deterioration in the security environment in Europe and around the globe requires urgent reflection on how to strengthen the EU’s strategic autonomy and reduce its dependencies on countries like the PRC that are systemic rivals, not strategic partners; stresses the need to prevent sensitive emerging technologies and key dual-use items from being leaked to destinations of concern that pursue or collaborate in MCF strategies;

Added13. Argues that a key area of EU critical infrastructure is its network of research institutes and research and development facilities, which play an important role in the EU’s ability to deliver on its green and digital transition commitments, alongside key arenas such as space defence; recalls the security vulnerabilities linked to forced technology transfers, intellectual property theft and knowledge leaks, both in the EU and abroad; calls for increased vigilance when accounting for such threats to the EU’s ability to innovate and foster growth;

Removed8. Remains concerned that European critical infrastructure is becoming increasingly vulnerable to external influence; commends, in this respect, recent legislative steps to enhance the resilience of critical entities in the EU; notes with concern, however, that such initiatives are largely limited to screening procedures for foreign direct investment, leaving other channels open for the CCP to gain access and influence over critical assets;

Added14. Notes that Chinese companies are already leaders in key technologies used in sectors such as 5G wireless infrastructure, drones, batteries, hypersonic missiles, solar and wind energy, as well as cryptocurrency; expresses its concerns over the uses of these technologies and the dependencies they create; notes, in this regard, that 100 % of the 5G RAN in Cyprus is composed of Chinese equipment, and 59 % in the case of Germany; stresses that this runs counter to the EU’s ‘5G security toolbox’ guidelines to mitigate security risks in networks and calls on the Council and the Commission to exclude the use of equipment and software from manufacturers based in the PRC in core network functions; recalls that Huawei has been participating in 11 projects under Horizon Europe until June 2023, thus receiving EUR 3.89 million of funding in total; therefore, urges the EU and European institutions to carry out a systematic screening of Chinese companies benefiting directly or indirectly from European programmes of strategic importance for the EU and, where necessary, terminate their participation; furthermore, calls on the Commission to propose additional security standards for Chinese suppliers of 5G and the next generation 6G network;

Removed9. Notes that the screening of stakeholders with access to critical infrastructure cannot be limited to direct investment; calls for the current instruments that address foreign direct investment and foreign subsidies to be expanded to include generalised screening procedures for all stakeholders involved in EU critical infrastructure projects; calls on the Commission, with the support of the Member States, to map, track and assess China’s access to critical infrastructure in the EU; stresses that the Member States are ultimately responsible for infrastructure protection, but have not consistently implemented current guidelines on foreign direct investment or set up national-level investment-screening mechanisms;

Added15. Considers the TikTok app, owned by Chinese conglomerate ByteDance, to be in breach of the European data privacy framework, making it a potential risk and a source of Chinese-backed disinformation; welcomes the decision of EU institutions and those of several EU Member States to suspend the use of the TikTok application on corporate devices, as well as personal devices enrolled in the institutions’ mobile device services;

Removed10. Welcomes the potential of the Commission’s proposal for a European economic security strategy to expand the EU toolkit to exports or outward investments in a narrow set of key enabling technologies with military applications, inter alia, in the areas of quantum computing, advanced semiconductors and artificial intelligence; calls for the swift adoption of the Commission’s proposals and for the Member States to fully implement the EU’s expanded regulatory framework to exclude entities that could contribute to MCF;

Added16. Warns that the deterioration in the security environment in Europe, in its neighbourhood, and around the globe requires urgent reflection on how to strengthen the EU’s open strategic autonomy and reduce its dependence on countries such as the PRC and systemic rivals that pose a security threat to the EU; stresses the need to prevent sensitive emerging technologies and key dual-use items, especially those that are critical to the EU’s security and defence from being transferred to destinations of concern that pursue or collaborate in MCF strategies; regards the establishment of EU-wide electronic customs and export licensing systems to be a critical step towards effective common European export controls and urges all Member States to make these systems operational by the end of 2024; furthermore calls on the EU institutions and the Member States to strengthen cooperation with the transatlantic and other like-minded partners in the protection of critical infrastructure, and to defend democracy and preserve our shared values, security and prosperity;

Removed11. Further welcomes the Commission’s proposal to prevent the leakage of sensitive emerging technologies by establishing a list of dual-use technologies, based on narrowly defined and forward-looking criteria, such as the potential enabling and transformative nature of a technology, the risk of MCF and the risk of the technology being misused to violate human rights; calls on the Commission and the Member States to identify and implement the relevant protection measures for these dual-use technologies as soon as possible;

Added17. Remains concerned that European critical infrastructure, from telecommunications networks to port facilities, is becoming increasingly vulnerable to external influence; commends, in this regard, recent legislative steps to enhance the resilience of critical entities in the EU; notes with concern, however, that such initiatives are largely limited to FDI screening procedures, leaving other channels open for the CCP to gain access to and influence over critical assets, including through elite capture, technology and intellectual property transfers, as well as supply chain and sales market dependencies; notes that the establishment of a thorough risk assessment and mapping framework is imperative to identifying critical infrastructure assets and their susceptibilities; considers it necessary to map, track and assess China’s and other third countries’ access to critical infrastructure in the EU and to jointly proceed with mitigating measures where necessary; in this regard, calls on the Commission, with the support of the Member States, to compile an exhaustive inventory of critical assets and systematically evaluate their vulnerability to external influences; and therefore calls for the expansion of the legislative initiatives to address such risks;

Removed12. Welcomes the adoption of the European Chips Act, which will increase the EU’s ability to produce semiconductors and create a strategic map of, inter alia, capability gaps in the semiconductor value chain in the EU, thereby limiting the EU’s dependence on third countries such as China; calls for further proposals to secure the production and supply chains of critical infrastructure and material within the EU;

Added18. Calls on the Commission to share with Parliament, before the end of this parliamentary term, a detailed analysis of the trade risks linked to technologies such as semiconductors, quantum computing, block chains, space, artificial intelligence and biotechnologies and the possible need for EU action in these fields;

Removed13. Calls on the Commission to propose a new legislative framework to mitigate the security risks coming from the suppliers of undersea cable systems; stresses the need to prevent cable system suppliers, such as Chinese companies, from sharing data with intelligence services other than to protect the infrastructure from outside intrusions or malignant attacks;

Added19. Recalls that the FDI screening regulation addresses risks to security and public order resulting from investments from outside the EU; notes the key added value of the screening mechanism as a pertinent tool that gives the EU and the Member States a better strategic overview and situational awareness of the trends, targets, means and methods deployed by foreign actors to increase their economic and political influence; calls for the current instruments that address FDI and foreign subsidies to be expanded to include generalised screening procedures for all stakeholders involved in EU critical infrastructure projects encompassing all modes of participation in critical infrastructure endeavours, including collaborative ventures, partnerships and technology transfers; also underlines that routine evaluations of critical infrastructure projects that involve non-EU stakeholders are essential and believes that this process should encompass scrutiny of ownership structures, dependencies within supply chains, and the transfer of technology associated with these projects; also, considers it necessary to establish due-diligence standards to identify China’s leverage over investors in EU critical infrastructure, and underlines that this approach should apply equally to candidate and potential candidate countries; stresses that the Member States are ultimately responsible for infrastructure protection, but have not consistently implemented current guidelines on FDI; is greatly concerned, in this regard, by the fact that not all Member States have in place or use mechanisms for screening foreign investment in critical infrastructure; urgently calls on the Member States to consistently implement current legislation related to FDI and on the resilience of critical entities;

Added20. Regrets in this regard the lack of adequate screening of risks of interference in public procurement related to security equipment, such as the case of the contract signed by Strasbourg airport to install airport security scanners and gates supplied by the European subsidiary of the Chinese company Nuctech, partly owned by the Chinese government and bound by the ‘United Front’ policy; warns that any such technologies could incorporate in-built security gaps or be accessed during their maintenance; on the other hand, welcomes the decision of the Romanian government to terminate negotiations with China General Nuclear Power Corporation, CGNPC, on the construction of nuclear reactors 3 and 4 at Cernavoda;

Added21. Stresses, however, that a strategic balance must be found between, on the one hand, the openness of the EU single market and its attractiveness for investments, and, on the other, the defence of the EU’s critical infrastructure and autonomy, considering the EU’s security vulnerabilities, especially as regards economic coercion or threats to the integrity of the EU’s critical infrastructure;

Added22. Calls on the Commission to consider ways of making its opinions on FDI screening more impactful, in order to avoid distortions of the single market and a race to the bottom among Member States; calls on the Commission and the Member States to increase harmonisation, including by building appropriate expertise, and to fully implement the FDI screening regulation; believes that there is scope and the need for the regulation to be strengthened in its upcoming review at the end of the year; encourages the Commission to present an ambitious legislative proposal on a revised regulation addressing all the loopholes that have emerged during its implementation, and to swiftly evaluate the possibility of a legislative proposal on a screening mechanism for outbound investments; recommends building any proposed outbound investment screening mechanism on an impact assessment that includes appropriate consultation with businesses to minimise any potential negative consequences for European competitiveness;

Added23. Welcomes the new ‘de-risking’ approach in the proposed European economic security strategy of 20 June 2023, which aims to maximise the benefits of the EU’s economic openness and to protect, promote and strengthen the EU’s open strategic autonomy, while minimising the risks resulting from economic dependencies and their possible weaponisation, including investments and research collaboration in key enabling technologies with military applications, inter alia, in the areas of quantum computing, advanced semiconductors and artificial intelligence; calls for the swift adoption of the High Representative’s and the Commission’s proposals and calls on Member States to fully implement the EU’s expanded regulatory framework to exclude entities that could contribute to MCF and to find alternatives for Chinese-financed projects in the EU through the development of a comprehensive approach to commonly identifying, assessing and managing risks to European economic security;

Added24. Further welcomes the High Representative and Commission’s proposal to prevent the leakage of sensitive emerging technologies by establishing a list of dual-use technologies, based on narrowly defined and forward-looking criteria, such as the potential enabling and transformative nature of a technology, the risk of MCF and the risk of the technology being misused to violate human rights; calls on the Commission and the Member States to identify and implement the relevant protection measures for these dual-use technologies as soon as possible;

Added25. Calls, in this regard, on the Commission, in coordination with the Member States, to design a rapid response mechanism for the detection of the dual use, or misuse, of infrastructures in the EU under Chinese ownership, participation or concession, that could be used to terminate the rights of concession and/or suspend the capacity of domain in the cases of ownership and participation; calls on the Commission to annually report to Parliament on:

Added(a) the detection of the possible dual use of strategic infrastructure that provides logistical and intelligence support to China;

Added(b) the full respect of EU trade legislation, especially concerning due diligence, anti-coercion and goods made with forced labour entering the EU market;

Added26. Welcomes the adoption of the European Chips Act, which will increase the EU’s ability to produce semiconductors and create a strategic map of, inter alia, capability gaps in the semiconductor value chain in the EU, thereby limiting the EU’s dependence on third countries such as China; calls for further proposals to secure the production and supply chains of critical infrastructure and materials within the EU; further calls on the Commission and Member States to develop additional initiatives aimed at enabling closer coordination and collaboration with like-minded partners and allies, and to monitor and further develop, where possible and in line with the EU’s aim to reduce further dependencies, global production capacities and supply chains in critical infrastructure and materials that are crucial to the security and defence of the EU; draws particular attention to Taiwan, which plays a significant role in the global supply chains and in the international rules-based order; reiterates its long-standing support for the EU-Taiwan Bilateral Investment Agreement and any arrangements mutually beneficial to bilateral trade and investment;

Added27. Calls on the Commission to propose a new legislative framework to mitigate the security risks coming from the suppliers of undersea cable systems, including through stricter monitoring and frequent review of the ownership structures of such suppliers, their previous investments in undersea cable systems and the proximity of the undersea cable systems to European and allied military bases; stresses the need to prevent cable system suppliers, such as Chinese companies, from sharing data with intelligence services other than to protect the infrastructure from outside intrusions or malign attacks; calls in this regard for initiatives aimed at the further development of European owned or based companies in the field of undersea cable systems;

Added28. Underlines that EU responses must be built around an augmented understanding of the relevant strategic picture centred on cross-policy and cross-national threat assessments and vulnerability studies on critical infrastructure; is of the opinion that a decentralised or neglectful approach, lacking clear visibility and scrutiny over projects with strategic significance for Europe’s defence and security, could greatly harm the EU’s geopolitical interests; recalls vulnerabilities linked to foreign interference, specifically in the information space, and the interplay between FDI projects and information manipulation operations by malign foreign actors;

Internal-external nexus: strengthening the resilience of the EU’s closest partners

Change 10

Changed14.29. IsExpresses cognisantconcern ofregarding the PRC’s penetration of the EU market and its wider neighbourhood; calls on the Commission and the European External Action Service (EEAS) to ensure that the measures taken to strengthen the resilience of the EU in the face of Chinese influenceinfluence, including de-risking, diversification and reduction of critical dependencies, are also extended to the EU’s closest partners, in particular accession countries and those part of the EUs neighbourhood policy;

Change 11

Changed15.30. Recalls that the PRC’s naval forces have means and legal tools to ensure that China’s civilian ships and infrastructure can be used for military and security purposes; considers that China canis able to use its civilian commercial infrastructure to support the PLA’s presence in third countries; warns that such MCF provides the PLA with access to foreign ports, enabling it to pre-position logistics support to sustain naval deployments as far afield as the Indian Ocean, the Mediterranean Sea and the Atlantic Ocean; underlines that the risks of espionage are highest when Chinese civilian commercial assets are located in logistical hubs close to EU and NATO naval bases or port operators that have signed agreements to provide logistical support to European companies; calls on the Member States to urgently address the need to reduce the risks of espionage and sabotage in critical infrastructure, in particular those with a military function, such as ports that are used by NATO; stresses, in this regard, that the EU and NATO must work together to develop a long-term plan to counter China’s MCF strategy in Europe and calls on the full implementation of the final assessment report of the EU-NATO task force;

Change 12

Removed16. Notes that one third of all African infrastructure built since 2010 has been financed and constructed by Chinese state-owned enterprises; underlines that, over the past 20 years, China has increased its trade, investment and loan commitments with few or opaque contractual obligations; expresses concern that this Chinese model is clearly attractive to many countries that cannot satisfy EU requirements for accessing equivalent levels of finance, thereby expanding Chinese influence to the detriment of EU partnerships; calls on the Commission and the EEAS to ensure that the EU’s high standards for investment with partners do not compromise it security relationships and engagement as a reliable and strategic partner;

Added31. Notes that ports are gateways to the world and as such play a crucial role in the EU’s economy; notes with concern that Chinese-owned or controlled entities have strategically increased their stakes in European ports and port infrastructure; calls on the Commission to present an EU strategic policy framework to reduce and limit influence and operational control by China and other regimes; recalls also that PRC projects power overseas by using a network of commercial ports and dual-use facilities that provide logistics and intelligence support to the Chinese navy; notes that in 2022, Chinese companies owned or operated terminals in 96 ports across 53 countries; further notes that in at least nine ports, two of which are in Europe, People’s Liberation Army Navy (PLAN) warships have undergone significant repairs or maintenance for vessels and equipment; points out that naval visits reveal areas of influence, prioritised operational zones, intelligence collection objectives and cooperation priorities;

Removed17. Underlines with concern the PRC’s strategy to build a ‘blue economy cooperation base’ along the coast of Africa, including through the construction of fishing vessels and vessel repairs facilities, which can also be used for military purposes; stresses that there is a general lack of detail and transparency on these agreements and licences with African countries; outlines the potential geopolitical consequences for the EU, especially in third countries where the EU is engaged;

Added32. Emphasises the need for a geopolitical approach to global cooperation on critical infrastructure in order for the EU to successfully face up to the new security challenges; notes that one third of all African infrastructure built since 2010, including around 50 % of Africa’s 3G networks and 70 % of its 4G networks, has been financed and constructed by Chinese state-owned enterprises; underlines that, over the past 20 years, China has increased its trade, investment and loan commitments by USD 160 billion with African Governments and their state-owned enterprises with few, or opaque, contractual obligations, predominantly in transportation, power generation, mining and telecommunications; highlights in particular the fact that a single Chinese telecommunication company has constructed up to 70 % of Africa’s information technology infrastructure, as well as the role played by Chinese companies in the financing, building, expansion and renovation of at least 14 sensitive intra-governmental African telecommunication networks; expresses concern that the Chinese model is clearly attractive to many countries that cannot or are unwilling to satisfy EU requirements for access to equivalent levels of finance, thereby expanding Chinese influence to the detriment of EU partnerships and triggering risks of unsustainable debt for these countries, harming their long-term development to the detriment of their local population; calls on the Commission, the EEAS and Member States to intensify efforts, including attracting investments from the private sector, to implement the Global Gateway Investment Package of EUR 150 billion, agreed at the 6th EU-AU Summit in February 2022; urges the Council and the Commission to swiftly implement projects, especially lighthouse projects, under the initiative;

Added33. Underlines its concern that the PRC’s strategy to build a ‘blue economy cooperation base’ along the coast of Africa, including through the construction of fishing vessels and vessel repairs facilities, could also be used for military purposes; stresses that there is a general lack of detail and transparency regarding these agreements and licences with African countries; outlines the potential geopolitical consequences for the EU, especially in third countries where the EU is engaged;

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34. Instructs its President to forward this resolution to the Vice-President of the Commission / High Representative of the Union for Foreign Affairs and Security Policy, the Council and the Commission.