During the U.S. presidential campaign, Donald Trump accused China of damaging the U.S. economy. In Germany, the Chinese takeover of the robotics manufacturer Kuka fueled the debate about the dangers of selling off German high technology. At the urging of the U.S. government, Economics Minister Sigmar Gabriel indefinitely postponed the purchase of the mechanical engineering firm Aixtron by Chinese investors. He cited German foreign trade law and announced a tightening of its legal foundation.
But before a game of legislative one-upping begins in Berlin and other European capitals, the European Union as a whole should look at creating a continent-wide legal framework for foreign trade in order to avoid distortions through competition. This is a tightrope walk between maintaining open markets and assuring state security. A blanket suspicion toward foreign and also Chinese investments is not constructive.
The least the E.U. can do is introduce standards of information and transparency comparable to those in the United States.
If there used to be fear about outsourcing production sites and jobs as well as about price dumping, the focus in Europe is increasingly on the outflow of high technology, as well as on the imperatives of geostrategy and security policy. In view of the increasing sensitivity of confidential data flows, it is no wonder that the U.S. is blocking market access to the Chinese network operator Huawei and thereby protecting the American provider Cisco.
Without arguing in favor of protectionism, there is nonetheless reason to take a realistic look at the challenges imposed on the E.U. by Chinese state capitalism. There are indications that state interests often stand behind private Chinese investors. Without obligations to transparency and information, such as are required by law in the U.S., it is impossible to know whether foreign investments are being granted through financing from state banks or state-owned conglomerates. The least the E.U. can do is introduce standards of information and transparency comparable to those in the United States.
A further argument against national solo attempts like that of Mr. Gabriel, and in favor of E.U.-wide legislation, is the fact that the free flow of capital within the European single market makes it easy to simply evade national laws. This is evident in the generous offers made by individual member states such as Malta, Bulgaria and Cyprus to grant citizenship to foreign investors and thereby allow them access to the entire European Union.
To contact the author: firstname.lastname@example.org