By Pan Yue
China’s firms already face trouble from tensions between China’s president Xi Jinping and US counterpart, Donald Trump
A decision by the European Parliament, the European Council and the European Commission to scrutinize foreign investments more closely for national security reasons has rattled financiers in China.
While a joint statement in November did not explicitly mention any countries, bankers and lawyers reckon the rules are directed against acquisitive Chinese companies; these already face difficulties investing in the US thanks to tensions between US president Donald Trump and his Chinese counterpart Xi Jinping.
The EU framework is quite straightforward: it requires member states to report to the Commission acquisition deals that might be considered to cover critical infrastructure or technologies, or deals covering security of supply or access to sensitive information.
The Commission, as well as member states, will give opinions on the transactions, but individual countries will have discretion over whether to block a deal or not.
Previously, only 14 EU member states had an M&A screening mechanism and there was no bloc-wide national security review process.
The new policy will add an additional layer of complexity to the approval of acquisitions, but it does not mean that Europe will be closed to foreign investments.