VDMA and EU discuss how to deal with investment from China

Europäische Union 2017

The EU is currently negotiating greater control over investment from China. At an event in Brussels, representatives of the mechanical engineering sector argued in favour of market opening in China rather than investment barriers in Europe.

Investors from China are creating a stir through acquisitions in Europe – including in mechanical engineering in Germany. So, is European cutting-edge technology at risk of being sold off? In a panel discussion in Brussels, the VDMA debated this question with the ECIPE think-tank and representatives of the European Commission and the EU Parliament. In the EU at any rate, Chinese investors have been causing concern. Institutions and Member States are currently negotiating greater control over investment from China.

Rainer Hundsdörfer, CEO of Heidelberger Druckmaschinen AG and chairman of the VDMA’s foreign trade committee, saw no need to worry about the growing influence of the Chinese. “My experience with China, and the experience of the recently acquired engineering companies, is positive”, said Hundsdörfer. Instead of threatening its own investment barriers in Europe, the EU must lobby more forcefully in China for further market opening. “China has come of age and no longer needs to protect itself from foreign investors. The country is ready for free competition”, according to Hundsdörfer.

My experience with China, and the experience of the recently acquired engineering companies, is positive.

The representatives of the European institutions took a more critical stance. “The EU needs to pursue a long-term strategy that goes beyond the duration of business plans”, said MEP Iuliu Winkler (EPP), Vice Chair of the EP International Trade Committee. In China, business relationships always have a political dimension that needs to be considered. However, Winkler also favoured dialogue with China: “The right way is cooperation, not confrontation. We need progress on the ongoing negotiations on the EU-China investment agreement.”

The European Commission also called for more intensive analysis of investments from China in the future. After all, China would not simply hand out money, but would pursue an agenda, Marco Chirullo, Deputy Head of Unit for Trade Relations with the Far East at the EU Commission’s Directorate-General for Trade, reminded the attendees. In his view, at present the competition between European and Chinese companies is not necessarily fair: “We need to look at what capital is being used in this competition. Money from the state? China is playing an unfair game on the world markets and is using the WTO rules to its advantage.”

In September 2017, the EU Commission proposed a mechanism for strengthening controls on foreign investment in the EU. A compromise between Parliament, Commission and Member States on European investment control could still be reached this year.