Sweden monitoring Chinese investments . . .
China’s investments into Europe are about to face more scrutiny. Last week the Swedish Defence Research Agency released a report tracking China’s investments, while Germany, eyeing China, announced plans to shield its firms from foreign acquisition. Sweden’s investigation of Chinese corporate acquisitions found that Chinese owners have bought some 65 Swedish companies since 2002 – including familiar names such as Volvo and Spotify. The Swedish report noted that Chinese investments have increased rapidly in the country and it drew a connection between investment activities and Chinese industrial policies to acquire technologies.
Germany prepares to review more . . .
The newly proposed regulations in Germany would enable the government to review purchases of foreign stakes in domestic firms as low as 10 per cent (down from 25%). Ramping up its 2018 restrictions on foreign investments into “critical infrastructure” like defence, energy, and telecoms, the new regulations also restrict investments in biotech, artificial intelligence, quantum technology, robotics, and semiconductors. The new regulations proposed by German Economy Minister Peter Altmaier seek to address issues that emerged during the takeover of German robotics firm Kuka by Chinese manufacturer Midea in 2016. That deal highlighted concerns in Germany over losing its high tech industrial sector to Beijing, which is pushing its own domestic development of technologies, in part through overseas investment. Since the Kuka deal, the German government has gone so far as to purchase stakes in German companies in order to block China’s investments.
Europe’s eye on industry and investment . . .
Around Europe, governments and regulators have been looking closely at Chinese investment, seeking to assess its scale and impacts. While the roll-out of Huawei 5G technologies has spurred concerns over allegations that the technology poses security risks, many countries have so far resisted calls to ban Huawei from the bidding process. Instead, governments have been quicker to act in cases where Europe’s domestic technologies and firms have been targets of China’s industrial policy and investments, rolling out rules restricting investments or subjecting them to tighter review. For Canadian policy-makers looking to Europe, it will be important to recognize not just what policy responses are being rolled out, but in what context. For example, China’s 65 acquisitions in Sweden since 2002 pale in comparison to the 108 Chinese mergers and acquisitions in Canada recorded in the APF Canada Investment Monitor since 2003.
- Carnegie Endowment for International Peace: A Divided Europe’s China Challenge
- Financial Post: Wary of China, Germany plans rapid state intervention to protect key industries
- Swedish Defence Research Agency: Chinese corporate acquisitions in Sweden: a survey (in Swedish)