Keeping China in Check: EU to Screen ‘Risky’ Foreign Investment

Written by | Monday, May 7th, 2018

The European Union is readying to tighten its control over foreign investment, a sign of increasing wariness of Beijing’s efforts to turn China’s $11 trillion economy into a global power. According to an independent survey conducted by Bloomberg, at least 15 EU governments are supportive of drafting legislation that would screen foreign investment from outside the EU. With a majority prepared to give it a go, the investment-screening proposal is in line to become law.

The interest in an investment screening demonstrates that Europe is getting more cognizant of the risks and not just benefits of Chinese investment on the continent. According to another Bloomberg study, China has invested at least $318 billion in Europe over the past decade – in critical infrastructure and high tech. It is more than the US investment in Europe over the same period. This pushback also points to the dilemma shared by countries around the world as to how to deal with China’s growing global network.

Europe is not the only one interested in investment screening mechanisms. The US, Japan and Australia adopt rigorous programs as well. The EU proposal would create a centralized database of China’s past investment activity in Europe and an alert mechanism for future ones, leaving the end power of approving deals with individual governments. The EU Parliament’s international-trade committee would be nevertheless involved in the vote on amendments. “We have to assess whether investment by non-EU countries aims to do business, to promote growth, to create jobs in Europe, or whether it’s just aimed to acquire and then take the know-how of our businesses away from Europe,” Sandro Gozi, Italy’s junior minister for European affairs, explained.



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