The Evolving US–China Rivalry: Strategic Dimensions and Implications for Europe in a Multipolar World

The geopolitical landscape is entering a new, multifaceted phase of competition between the United States and China, encompassing not only traditional military and trade disputes but also expanding into finance, energy, technology, cyber security, and regional influence. As these superpowers vie for dominance, Europe finds itself at a critical crossroads—challenged to safeguard its security, economic sovereignty, and technological independence amid this complex, multipolar contest.

Broadening the Scope: From Traditional Domains to Multi-Domain Competition

Historically, Europe's economic ties with China—such as China surpassing the US as Germany's leading trading partner—signaled a burgeoning interdependence. However, recent developments reveal that such integration has become a strategic vulnerability. Both Washington and Beijing are leveraging their influence to shape global norms, control critical supply chains, and expand their regional footprints.

Key Developments Reshaping the Geopolitical Arena

• Financial and Infrastructure Competition: Beijing continues to push for the internationalization of the yuan, aiming to challenge the US dollar’s dominance. Efforts to establish the yuan as a global reserve currency have significant implications for Europe's financial autonomy. Simultaneously, China’s investments in port infrastructure across the Indian Ocean—including strategic holdings in maritime hubs—serve as leverage points to extend influence over vital trade routes. These developments threaten maritime trade pathways crucial for European energy security and supply chains.

• Regional Stability and U.S. Support: A notable recent move involves the U.S. backing the Philippines in its significant gas dispute with China, as detailed in "U.S. Backs Philippines in Major Gas Dispute With China." This strategic support underscores Washington’s intent to counter Chinese assertiveness in energy-rich maritime zones. The establishment of a new U.S. airbase in the Philippines, highlighted in "New U.S. Airbase in Philippines Sends Shockwaves to Beijing," exemplifies Washington’s efforts to reinforce regional stability and deter Chinese expansion. These regional maneuvers have direct repercussions for Europe’s energy security and maritime interests.

• Trade Dynamics and Shifts: Despite China’s rising role in global trade—illustrated by "China Trade Rises as the US Share of Global Trade Falls"—Europe faces a complex landscape where Chinese influence complicates diversification efforts. The expanding Chinese trade footprint challenges Europe’s ambitions for resilient, diversified supply chains.

Economic and Resource Competition: The Battle for Critical Assets

China’s strategic pursuit of economic influence extends beyond trade to control over vital resources and financial mechanisms:

• Yuan Internationalization: Beijing’s push to elevate the yuan’s status aims to diminish Western financial dominance. Such efforts influence Europe’s financial sovereignty, especially amid rising geopolitical tensions.

• Critical Minerals and Rare Earth Elements (REEs): China dominates over 80% of global REE refining and processing, which are essential for electronics, renewable energy, and defense systems. Europe is actively responding by developing domestic processing facilities, stockpiling minerals, and seeking alternative sources to reduce dependency—a necessary step toward technological autonomy.

• Maritime and Energy Security Risks: Disputes like the South China Sea gas conflicts, involving the Philippines, exemplify how resource competition in maritime zones directly threaten European energy interests. These tensions underscore the importance of bolstering maritime capabilities and diversifying energy sources to mitigate vulnerabilities.

Technological Frontiers: AI, Semiconductors, and Manufacturing Resilience

Technological sovereignty has become a central battleground in US–China rivalry, especially in sectors such as AI, semiconductors, and prototyping:

• AI and Military Integration: China’s rapid advancements in AI—covering civilian, autonomous, surveillance, and military applications—pose strategic risks. Beijing’s focus on integrating AI into autonomous weapons and cyber operations threatens strategic stability. Europe is actively pursuing sovereign AI ecosystems to maintain independence and counter external interference, with initiatives like the European Chips Act exemplifying efforts to bolster domestic capabilities.

• Semiconductor Supply Chains and Prototyping: Control over advanced chip manufacturing remains a geopolitical priority. The Biden administration’s restrictions on semiconductor exports to China aim to curb Beijing’s technological progress, particularly given Taiwan’s pivotal role in chip fabrication. Europe’s European Chips Act seeks to develop domestic manufacturing and reduce reliance on external suppliers, enhancing supply chain resilience.

• Developing Secure Prototyping Infrastructure: As highlighted in "The Prototyping Battleground," establishing secure, advanced semiconductor prototyping facilities is crucial for national security and technological independence. Supply chain vulnerabilities and intellectual property theft threaten Europe’s strategic autonomy, prompting increased investment in domestic prototyping and manufacturing infrastructure.

• Critical Minerals and REEs: Europe’s strategy to reduce dependence on Chinese-controlled resources involves domestic mineral processing, stockpiling, and forging new supply partnerships—imperative for supporting electronics, renewable energy, and defense industries.

Cyber and Hybrid Warfare: The New Frontiers

Cyber security has escalated as a critical component of US–China competition:

• AI-Enabled Cyber Attacks: Recent reports, such as "AI-fuelled supply chain cyber attacks surge in Asia-Pacific," illustrate how AI is increasingly exploited for sophisticated cyber operations. Such threats pose significant risks to Europe’s critical infrastructure and digital supply chains.

• China’s Dual Cyber Strategy: The Eurasia Review’s analysis, "Chinese Dualism On Cyber Security Exposed," highlights China’s contrasting cyber posture—combining crackdowns on cybercrime with strategic cyber operations for espionage, influence, and warfare. This duality complicates efforts to establish international norms and underscores Europe’s need to develop resilient, sovereign cyber defenses and participate actively in norm-setting processes.

Regional and Global Shifts: Alliances, Diplomatic Strategies, and Defense Posture

Recent developments reflect shifting regional alliances and strategic efforts:

• U.S. Support for Regional Allies: The U.S. is strengthening regional partnerships, exemplified by the new U.S. airbase in the Philippines, which signals a strategic effort to counter Chinese influence—an area of concern for Europe’s own regional stability and energy security.

• China’s Diplomatic Expansion: China’s efforts to persuade Southeast Asian nations to support a new maritime order, discussed in "China May Yet Persuade Southeast Asia To Support New Maritime Order," aim to reshape regional norms and governance. Europe closely monitors these moves, recognizing their potential to disrupt global trade routes and regional stability.

• UK’s Indo-Pacific Strategy: The UK’s recent strategy toward ASEAN and the broader Indo-Pacific, as detailed in "China, ASEAN, and Beyond: The UK Strategy for the Indo-Pacific," exemplifies Europe’s broader shift to enhance partnerships in the region, fostering stability and countering Chinese influence.

• U.S. Domestic Legal Developments: A recent landmark U.S. Supreme Court ruling influences trade and economic policies, potentially affecting how disputes are managed amid the broader US–China contest.

Europe’s Strategic Response: Building Resilience and Autonomy

In light of these rapidly evolving challenges, Europe is adopting a comprehensive strategy to bolster its resilience:

• Defense Modernization: Upgrading naval and cyber capabilities, participating in joint maritime exercises, and protecting critical infrastructure are vital steps to secure maritime trade routes and technological assets.

• Technological Sovereignty: Investment in AI, semiconductor manufacturing, and military innovation—through initiatives like the European Chips Act and sovereign AI ecosystems—is aimed at reducing external dependencies and ensuring strategic autonomy.

• Resource Diversification: Developing domestic mineral processing facilities, stockpiling critical minerals, and establishing new supply routes are essential to mitigate dependency on Chinese-controlled resources.

• Deepening Regional Partnerships: Collaborating with Indo-Pacific democracies such as India, Japan, and ASEAN nations enhances regional stability and creates a collective buffer against Chinese assertiveness.

• Digital and Financial Strategies: Promoting financial diversification, exploring digital currencies, and blockchain-based payment systems aim to bolster economic sovereignty and counter external monetary pressures.

Current Status and Future Outlook

The recent surge in defense spending—highlighted by the IISS Military Balance Report, which notes that global defense expenditures are at new highs amid deteriorating security conditions—underscores the urgency for Europe to act decisively. Simultaneously, the strategic deployment of new U.S. military assets, such as the Philippines airbase, signals a shift toward greater regional military presence, with broad implications.

Europe’s immediate priorities include:

• Securing supply chains for semiconductors and critical minerals amid persistent vulnerabilities.
• Hardening cyber defenses against increasingly sophisticated AI-enabled cyberattacks targeting critical infrastructure.
• Accelerating domestic innovation in AI, chip manufacturing, and defense technologies to assert strategic independence.
• Reinforcing regional alliances to foster stability and resilience in the Indo-Pacific and beyond.

As US–China rivalry continues to evolve into a comprehensive contest over technology, resources, and influence, Europe's ability to adapt swiftly—by investing strategically, fostering international cooperation, and strengthening its own capabilities—will determine its future role in this rapidly changing, multipolar world. The unfolding developments, including regional military enhancements and diplomatic moves, highlight the importance of a cohesive, resilient European strategy to navigate the challenges ahead.