EU Commission President Jean Claude Juncker presented proposals last week for a European investment screening framework to avoid takeovers in some sensitive industrial sectors.
“Europe must defend its strategic interests,” Juncker said during his state of the union speech on September 13. “If a foreign, state-owned company wants to purchase a European harbor, part of our energy infrastructure or a defense technology firm, this should only happen with transparency, with scrutiny, and debate,” he said.
While many details of the proposals are yet unclear, the plan involves better coordination between EU member states, information sharing and common principles. Assessments of the EU would be non-binding and EU member states would be able to continue their own national screening mechanisms. So far, roughly half of all EU countries have agencies that screen foreign investments on their territory. The idea for EU-wide regulations was pushed by France, Germany and Italy.
Germany had tightened its own rules on foreign corporate takeovers in July, following a series of Chinese deals, notably the purchase of robotics maker Kuka by the Chinese company Midea. That deal had raised concerns that China was gaining access to key technologies while shielding its own companies from foreign takeovers.
China expressed concern over the EU plans. A foreign ministry spokesman said on Monday the EU had for a long time been promoting free trade and making investment easier. Closing the door would not achieve lasting development.
However, the European Chamber of Commerce in Beijing called on China to comply with its own calls for openness. In its annual position paper, published on Tuesday, the chamber said in areas such as strategic technologies, Chinese investors enjoyed far greater access to the European market than Europeans did in China.
Within the EU Junckers proposals could face political difficulties. France, Germany and Italy welcomed the move, yet Finland voiced opposition. The Finish trade minister said the EU plans would achieve little and risk a trade war. Other EU countries like Greece, Portugal and Hungary, which are keen on Chinese investment to develop their economies, might also have reservations about the Commission plans.
Concerns over Chinese state-led investments have also been raised elsewhere. Last week, US President Trump blocked the sale of a chipmaker, Lattice Semiconductor Corp, to a Chinese investor citing “national security concerns.”
https://www.merics.org/en/merics-analysis/china-update/china-update-152017#c22490
