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.

the sting Milestones

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

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

Elections in Europe: No risks for the EU, leaders readying to face Trump-Brexit

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

The key takeaways of G7 Summit in Canada

UN Security Council offers Yemen Special Envoy ‘their full support’

Baku forum to push back against ‘rise of hate’ with strong call for cultural and religious tolerance, says UN official

EU Commission: Banking and energy conglomerates don’t threaten competition!

Data protection: MEPs urge the Commission to amend UK adequacy decisions

Trash bin at the top of the world: can we prevent Arctic plastic pollution?

Addressing the consequences of digitalisation in the Russia & CIS region

The European Union is strengthening its partnership with Senegal with €27.5 million

On World Health Day, new report says the world needs 6 million more nurses

EU: All economic indicators in free fall

How to replace coal power with renewables in developing countries

Four in five adolescents failing to exercise for even 60 minutes a day, UN health agency warns

Immigration crisis at its very worst: EU to outsource rescue business to North Africa?

Water scarcity is a growing problem across the Middle East. Is this how we solve it?

Argentina’s agro-food sector is growing remarkably, but agriculture policies are not keeping pace

Brussels Vs. Google: The €1 bn EU fine and the US response

These are the world’s 10 most competitive economies in 2019

“Airbnb and YouTube are two great examples of a crowd based capitalism”, key stakeholders outline the boundaries of the 4th Industrial Revolution in Davos

Why remote working doesn’t have to mean alienated employees

Civil society groups matter for Cambodia’s sustainable development: UN expert

A Sting Exclusive: “One year on from the VW scandal and EU consumers are still in the dark”, BEUC’s Head highlights from Brussels

State aid: Commission approves €150 million Austrian subordinated loan to compensate Austrian Airlines for damages suffered due to coronavirus outbreak

Team Europe partners with Equity Bank to support Kenyan business and agriculture amid COVID-19

In 1975 NASA envisioned future life in space would look like this

The middle-class dream is moving beyond millennial reach

Team Europe: €34 billion disbursed so far to tackle COVID-19 in partner countries

G20 LIVE: The European Sting covers online world news and the latest developments at G20 from Antalya Turkey

Defence: European Commission paves the way for first joint industrial projects under EU budget

Joint EU-US Press Release on the Global Methane Pledge

An U.S.-EU Agenda for Beating the Global Pandemic: Vaccinating the World, Saving Lives Now, and Building Back Better Health Security

Your morning cup of coffee contains 140 litres of water

Monday’s Daily Brief: Nigeria massacre, Libya shelling condemned; recycled plastic used to build classrooms in Côte d’Ivoire

Gender Disparity in Medicine

First-ever UN report on disability and development, illustrates inclusion gaps

Statement by Commissioner for Crisis Management Janez Lenarčič on the explosion in Beirut, Lebanon

Accelerating SDG Progress in Asia – Pacific

UN expert ‘shocked’ by Egyptian reprisals against human rights defenders she met

Doctors vs. Industry 4.0: who will win?

A Sting Exclusive: “Paris is the moment for climate justice”, Swedish MEP Linnéa Engström claims from Brussels

A new generation of women leaders is making waves in the Arab world

Brazilian health: right or privilege?

Transport Committee approves major reform of road transport sector

The Ultimate Career Choice: General Practice Specialist

Rohingya emergency one year on: UN says thousands of lives saved, but challenges remain

Commission reports on 2019 European elections: fostering European debates and securing free and fair elections

5 things you need to know about creativity

EU supports recovery and resilience in Nigeria with additional €50 million

COVID-19 underlines the importance of fintech in emerging markets

EU Youth Conference in Riga concludes with recommendations for ministers

Protecting the EU budget: European Public Prosecutor’s Office will start operating on 1 June

Eurozone at risk of home-made deflation and recession

Facts and prejudices about work

Hopes for Palestinian State hit by ‘facts on the ground’ : senior UN official

How smart tech helps cities fight terrorism and crime

How to build public trust in a sustainable energy future

Eritrea sanctions lifted amid growing rapprochement with Ethiopia: Security Council

Globalization 4.0 means harnessing the power of the group

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