EU plan won’t stop Chi­nese in­vest­ment

China Daily (Canada) - - VIEWS - Feng Zhong­ping, vice-pres­i­dent of the China In­sti­tutes of Con­tem­po­rary In­ter­na­tional Re­la­tions

The Euro­pean Union, Euro­pean Par­lia­ment, Euro­pean Coun­cil and the Euro­pean Com­mis­sion reached an agree­ment on a for­eign in­vest­ment screen­ing frame­work to end “Euro­pean naivety” and pro­tect its es­sen­tial in­ter­ests. Many say the move will have a big im­pact on China’s fast-in­creas­ing merg­ers and ac­qui­si­tions and in­vest­ments in Europe. Two ex­perts share their views on the is­sue with China Daily’s Pan Yix­uan. Ex­cerpts fol­low:

But in­stead of wel­com­ing such a move, the EU seems in­tent on block­ing it.

The US, too, has tight­ened its vig­i­lance against Chi­nese en­ter­prises’ co­op­er­a­tion with and ac­qui­si­tions of high-tech com­pa­nies in the EU. It has also ex­erted pres­sure on its EU al­lies to be wary of Chi­nese com­pa­nies’ in­vest­ment moves.

Al­though merg­ers have their pros and cons, they are an im­por­tant part of glob­al­iza­tion. In 2005-06, many US and EU com­pa­nies en­gaged in M&As world­wide, rais­ing China’s con­cern over its na­tional se­cu­rity and na­tional brands. But China didn’t re­act like the EU and the United States — and even­tu­ally merg­ers turned out to be help­ful for in­dus­trial in­te­gra­tion dur­ing China’s fur­ther open­ing-up.

The ma­jor prob­lem with EU in­dus­tries is they lag be­hind in the dig­i­tal economy be­cause of their pref­er­ence for tra­di­tional in­dus­tries, and dif­fi­culty in adapt­ing to emerg­ing in­dus­tries and ex­pand­ing their lim­ited mar­ket. Be­sides, US in­vestors have ac­quired most of the EU’s promis­ing in­ter­net com­pa­nies and moved them over­seas, for in­stance, to the US west coast.

The EU’s tra­di­tional lead­ing com­pa­nies face great pres­sure from rapidly de­vel­op­ing Asian economies, es­pe­cially China, which have squeezed EU com­pa­nies’ prof­its be­cause of their cheaper la­bor and man­u­fac­tur­ing costs. Some fam­ily-run busi­nesses in the EU wanted to sell their com­pa­nies for hand­some amounts. But in­stead of al­low­ing them to do so, the EU of­fi­cials sought refuge in pro- tec­tion­ism to ar­rest Europe’s in­dus­trial de­cline.

The US has con­sid­er­able in­flu­ence in Europe, but now that it is lead­ing the wave of anti-glob­al­iza­tion, the EU has to safe­guard its in­ter­ests and rights from the US’ uni­lat­eral and pro­tec­tion­ist poli­cies. And this is one area where China is very im­por­tant to the EU — for in­stance, the EU de­pends a lot on its auto in­dus­try and spends huge amounts on re­search and de­vel­op­ment, and China plays an im­por­tant role in the re­lated chem­i­cal and the man­u­fac­tur­ing in­dus­tries.

The EU sus­pects for­eign in­vest­ments, par­tic­u­larly those from emerg­ing coun­tries, will com­pro­mise Europe’s in­fras­truc­ture net­work and threaten its se­cu­rity.

Many be­lieve the EU’s in­vest­ment screen­ing frame­work is tar­geted at Chi­nese in­vest­ments in Europe, which have grown rapidly since 2016. But the EU claims the frame­work is aimed at pro­tect­ing and pro­mot­ing the bloc’s in­dus­trial de­vel­op­ment in­stead of re­strict­ing the EU’s co­op­er­a­tion with for­eign com­pa­nies.

The agree­ment within the bloc on screen­ing is to pro­mote in­for­ma­tion shar­ing among EU mem­ber states and al­low dif­fer­ent EU bod­ies to bet­ter play their roles in en­act­ing for­eign in­vest­ment rules, al­though EU mem­ber states will have the fi­nal say when de­cid­ing about for­eign in­vest­ments.

As such, in­vest­ment screen­ing may limit, but not to­tally ban, for­eign in­vest­ment, par­tic­u­larly those in high-tech and in­fras­truc­ture such as water and elec­tric­ity that the EU con­sid­ers strate­gic se­cu­rity sec­tors, par­tic­u­larly be­cause many EU com­pa­nies wel­come for­eign in­vest­ments and M&As for their fur­ther de­vel­op­ment.

Be­sides, once the fi­nal mech­a­nism comes into force, the EU will is­sue a list with de­tails of in­vest­ment reg­u­la­tions so that for­eign com­pa­nies will know how to in­vest and co­op­er­ate in Europe. There is there­fore no need to worry too much about the screen­ing frame­work or the EU’s in­ten­tions.

Newspapers in English

Newspapers from Canada

© PressReader. All rights reserved.