In the showdown between globalism and nationalism, the EU has generally made the case for looking outward. A spree of corporate takeovers by Chinese firms, however, is testing the limits of that stance.
Efforts to restrain Chinese dealmaking have cropped up from Washington to Berlin—and now Brussels is weighing its own, EU-wide response to such acquisitions. European Commission president Jean-Claude Juncker has set up a group on trade and globalization to focus on the matter and present options, ideally in time for his State of the Union speech in September, according to EC sources.
This week, Berlin is expected to work with Rome and Paris to submit their own draft of a beefed-up plan to screen deals, according to Politico. While discussions are ongoing, our EC sources note that member countries can already put in place certain measures regarding foreign investment, and some already have.
Foreign ownership of companies that develop advanced technology is a particular concern to governments around the world. Not every Chinese acquisition in the US or Europe is necessarily to acquire rare Western technology, of course. Some deals may have been a way to evade capital controls (paywall) and to get currency out of the country, for example. But the takeover of an advanced robotics maker in Germany seemed to be what crystalized European concerns.
The worry is that key technology companies and know-how is ending up in Chinese hands, sometimes state-owned, even as large swaths of China’s industry are off limits to foreign acquisitions. While openness to foreign investment is a key EU principle, according to a commission white paper in May, takeovers of advanced technology companies requires “careful analysis and appropriate action.”