US technology investment barriers won’t block greater cooperation between China, EU

US President Donald Trump plans to ratchet bilateral economic tensions higher by barring many Chinese companies from investing in key technologies in the US and blocking additional technology exports to Beijing, the Wall Street Journal has reported, citing people familiar with administration plans. The news comes at a time when China and the EU aim to step up cooperation in bilateral trade and investment to oppose unilateralism and protectionism.

While Washington threatens to crack down on Chinese investment, positive progress has been made in talks on a China-EU bilateral investment treaty (BIT). These talks were launched in 2013 to fully tap into the potential of bilateral investment.

The two sides will strive to exchange offers related to market access at the 20th China-EU Summit, which is scheduled to be held in China in July. Advanced manufacturing, materials, semiconductors and other high-tech industries are key areas that determine Europe’s position in the global market. Those sectors should be the frontier for the EU’s opening-up brought on by the BIT talks with China. Although China’s outbound investment shrank overall in 2017, foreign direct investment flowing into Europe from China surged 76 percent year-onyear to $81 billion, according to Baker McKenzie.

The US is not the only investment destination for Chinese technology companies. If Trump sets up obstacles for them to invest in the US, it will be an opportunity for Chinese technology companies to shift their focus to other regions such as the EU, but the US economy will be the one that suffers losses.

According to the results of the annual business confidence survey of the EU Chamber of Commerce in China, a group representing more than 1,600 European companies, more than 60 percent of those surveyed said that they perceive Chinese companies to be as innovative as, or more innovative than, European enterprises. For too long, some US observers have treated China as a country that tries to lead in science and innovation through the theft or forced transfer of US technology, but the criticism by the US is groundless. The survey showed that technology investment will be mutually beneficial to both China and the EU, given Chinese companies’ increased strength in innovation.

Even if Trump wants to escalate the US trade friction with China by barring Chinese technology companies from investing in the US, he will be unable to prevent Chinese companies from investing in European countries to cooperate with US companies’ rival in those countries.