China and UK relations post Brexit as EU addresses Chinese takeovers

Jean-Claude Juncker, Li Keqiang, Donald Tusk
Date: 02/06/2017
© European Union, 2017
Source: EC – Audiovisual Service

Chinese acquisitions of European companies have attracted the attention of the EU’s largest economies, who requested from the Commission to play a more active role on deciding whether these takeovers are ‘politically driven’ or not. The president of the EC, Jean-Claude Juncker, in turn, is expected to announce plans on how to manage foreign investments on September 13 in his State of the European Union speech.

On the other hand, Germany worries also about its economic growth in the event of a harsh Brexit with no trade deal with the EU. The latter will create the opportunity for the the UK to seek an upgraded cooperation pact with China empowering business ties. Nevertheless, it is too soon to judge the size and quality of the relationship between the EU and UK as talks are now undergoing too early stages and UK seems to be changing stance in the last few days, from a hard to a softer exit from the EU.

EU opposes Chinese takeovers?

Last month Germany, France and Italy sent a letter to the EC expressing their will to create a framework where the Commission would monitor and cast light on the acquisitions being driven by political incentives rather than market and economical decisions. As it was stated in the proposal, the EU member states are the ones to decide on denying takeovers on specific sectors which are of significant importance. That clearly strengthens the position of each and every EU country when a foreign acquisition takes place.

More specifically, it was mentioned there that: “The instruments currently available at the level of EU Member States, based on national security and public order, may not be sufficient to guarantee protection from those kinds of investment operations. To complement existing instruments, we encourage the Commission to look into solutions that respect reciprocity and ensure fair competitive conditions between EU and foreign investors based on market rules. We rely on the European Commission’s expertise as far as the analysis of the investment and foreign investment conditions is concerned. The final decision should be left to member states”.

Especially Germany has stepped up this year on this issue tightening its rules on foreign acquisitions earlier. This is mostly driven by the fact that China is targeting strategic sectors such as last year’s takeover if Kuka, one of the world’s leading suppliers of Robotics as well as plant manufacturing and system technology and a pioneer in Industry 4.0 too. Consequently, German Economy Minister Brigitte Zypries has pressured Jean-Claude Juncker to provide extra powers within the EU members to assess Chinese acquisitions of EU technological companies.

Germany’s concerns of a hard Brexit

On another note, according to a recent report by the German Ministry of Finance, Germany worries about Brexit as its economy is heavily linked to the British one. More in detail, Germany relies heavily on car exports to the UK with approximately 950.000 newly registered vehicles in Britain to have been made in Germany last year. Thus, Germany’s Finance Ministry fears that Britain leaving the EU without a trade deal could have serious impacts on the biggest EU economy.

China-UK relations

China  on the other hand has been investing in the UK, boosting significantly the economy of Albion. The Chinese Ambassador to Britain Liu Xiaoming mentioned in a signed article on the Evening Standard that: “Chinese investment is creating new jobs, generating green, low carbon growth and bringing economic prosperity and stability”. Chinese Ambassador added that “Chinese investments are beneficial for both sides and Britain’s unchanged commitment to staying open is the key to boosting the confidence of foreign investors”.

A balanced approach needed towards Chinese investments in the EU

Undeniably, China is the EU’s second-biggest trading partner right after the U.S. and the EU is China’s biggest trading partner in turn. The EU is always committed to open trading relations with China for a good reason. German Economy Minister Brigitte Zypries stated last week on the matter:  “On the one hand, the inflow of capital is a positive development, as it shows the attractiveness of Europe. On the other hand, one has to note that these investments are one-sidedly concentrated on hi-tech companies and companies that provide key technologies which shows obvious connections to the ‘China 2025’ strategy decided by the Chinese government.”

All in all, the decision to characterise an acquisition as ‘politically driven’ could be very difficult as well as vague and therefore very careful and precise consideration is needed prior to creating a framework where the EC and the EU member states will have more authorities and red tape to determine such takeovers. Chinese investments are much needed and welcome in the EU, especially at a moment when gloomy Brexit and other events are likely to cause considerable turbulences to the EU economy.

Advertising

Advertising

Advertising

Advertising

Advertising

the European Sting Milestones

Featured Stings

Stopping antimicrobial resistance would cost just USD 2 per person a year

To my Chinese friend

Human rights chief calls for international probe on Venezuela, following ‘shocking accounts of extrajudicial killings’

An open letter from business to world leaders: “Be ambitious, and together we can address climate change”

THE COMMITTEES: From the colonies to the space race – past, present, future converge in Fourth Committee

Inegalitarian taxation on labour haunts Europe’s social model

Postal workers in France are helping elderly people fight loneliness

Eurozone banks to separate risky activities: Can they stay afloat?

Joint advocacy letter template to sign and ratify the Treaty on the Prohibition of Nuclear Weapons

Nuclear test ban treaty critical to global collective security – UN chief

Water supply a human right but Greeks to lose their functioning utilities

Lack of involvement, or lack of opportunities?

UN condemns deadly attack against G5 Sahel force headquarters in Mali

FROM THE FIELD: A UN peacekeepers-eye view of DR Congo

Libya: ‘Substantial civilian casualties’ in Derna, UN humanitarian chief ‘deeply concerned’

EU-Russia relations: the beginning of a warmer winter?

What can stop the ‘too big to fail’ bankers from terrorising the world?

The European Parliament double-checks the EU 2014-2020 budget

Job automation risks vary widely across different regions within countries

Want a more inclusive society? Start with mobility

New chapters in EU-China trade disputes

UN urges ‘restraint’ in Bangladesh’s post-presidential election violence

Why are the Balkans’ political leaders meeting in Geneva this week?

A Sting Exclusive: “China-Africa Cooperation Sets a Fine Example of South-South Cooperation”, by China’s Ambassador to EU

Why do medical students have to emigrate to become doctors in 2017?

Young people meet in Malta to shape the future of Europe

UN agency chief calls Ethiopia’s revised refugee law ‘one of most progressive’ in Africa

Draghi tells the Parliament the ECB to use all its weaponry; euro slides to parity with the dollar

Canada and EU officially sign the trade agreement that could open-up the road to TTIP

UN chief condemns deadly attacks in Afghanistan

These charts show where the world’s refugees came from in 2017 – and where they’re heading

Imported and EU fisheries products should be treated equally

Why we need both science and humanities for a Fourth Industrial Revolution education

Better care, stronger laws needed to save 30 million babies on the brink of death

Eating less beef and more beans would cut deaths by 5-7%

Commission goes less than mid-way on expensive euro

Is ECB helping Germany to buy cheaply the rest of Europe?

TTIP is not dead as of yet, the 15th round of negotiations in New York shouts

Can Greece’s devastating economy deal with the migration crisis?

Three ways the world must tackle mental health

EU lawmakers vote to reintroduce visas for Americans over “reciprocity principle”

“Access denied”: the Greek health system under pressure

UN chief condemns killing of ‘blue helmets’ in DR Congo, as violence erupts prior to elections

MWC 2016 LIVE: EC adds Brazil to partner tally

Some Prevailing Arguments and Perceptions over the South China Sea Issue Are Simply Wrong

The representatives of the regions and the cities know better what the EU needs on migration, trade, poverty and taxation

Climate Change: a challenge yet to be tackled in medical schools

A Sting Exclusive: “Seize the opportunity offered by Africa’s continental free trade area”, written by the Director General of UNIDO

Climate change will never be combatted by EU alone while some G20 countries keep procrastinating

Guinea-Bissau: Upcoming elections vital to prevent ‘relapse’ into instability, says UN envoy

This is the world’s greenest football club – and you’ve probably never even heard of it

EU to increase spending and improve delivery of education in emergencies and protracted crises

Deal on protecting workers from exposure to harmful substances

From diamonds to recycling: how blockchain can drive responsible and ethical businesses

“Health and environment first of all”, EU says with forced optimism after 7th round of TTIP talks

‘12 million’ stateless people globally, warns UNHCR chief in call to States for decisive action

Bid to raise $5.5 billion for millions of Syrians and their host communities

EU members commit to build an integrated gas market and finally cut dependency on Russia

The ECB still protects the banks at the expense of the EU taxpayers

The way to entrepreneurship in the developing world

A Europe that delivers: EU citizens expect more EU level action in future

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s