Efforts by EU to raise barriers against investment from China can only backfire

Chinese companies have increased their investment in European strategic industries, raising concerns in the target countries that this may undermine national security. The EU may beef up a plan to screen foreign investments, Bloomberg reported, citing a key EU lawmaker.

Since China’s reform and opening-up began in 1978, many European companies have showed great enthusiasm for investing in manufacturing in China, making the country a key production and processing base for EU enterprises. European countries have benefited hugely from globalization, but it seems that their stance toward globalization has changed in recent years.

Chinese companies are in the midst of a boom in outbound investment and some of them, especially those in high-tech industries, are increasingly interested in investment in Europe. The EU cannot change this trend, just like China couldn’t stand in the way of globalization in past decades when the country accepted manufacturing from Europe.

China and the Western world will probably change their positions based on the progress of globalization 2.0, which signals China’s increasing role as a source of investment instead of an investment destination. However, the essence of both globalization 2.0 and the previous chapter dominated by Western manufacturing investors is the same.

In recent decades, globalization helped companies optimize their resource allocation based on the global industrial chain, and globalization 2.0 can likewise be expected to benefit investment all parties involved, European countries included. Chinese investment will bring jobs and tax revenue to support the overall EU economy.

It is unwise for the EU to hinder the progress of globalization 2.0. If unfair action is taken to screen foreign investments and target Chinese investors, China has various tools to use as countermeasures. At the least, Beijing can adopt the same measures toward EU investment.

China is now a vital market for many EU enterprises. They hope China can accelerate the opening of its markets to foreign investment, and China has been moving in this direction. China holds a positive attitude when it comes to strengthening communication with EU-based companies to understand their needs and improve its own business environment. But we cannot rule out the possibility that this may change if the EU takes measures to screen foreign investors and targets those from China.