Chinese investment is facing increased scrutiny fearing national security concerns
Summary
Following increasing trade tensions between China and the United States, more countries have raised national security concerns surrounding Chinese foreign investment. After the U.S. blocked several deals with China, Germany, Canada, and the U.K. all raised concerns on proposed Chinese investment in their own countries. On June 20, the British government delayed a merger of an aircraft manufacturers, Northern Aerospace, by its Chinese owned competitor, Gardner Aerospace Holdings. Similarly, an offer of €772 million by Chinese auto part maker, Ningbo Jifeng, to purchase German automotive supplier Grammer in late June 2018 has received widespread criticisms with an agreement yet to be reached. In late May, Canada blocked another acquisition, this time worth $1 billion, of the Aecon Group, a Canadian construction company, by China Communications Construction Company, citing national security concerns. Officials are fearing that China is acquiring companies purely to obtain access to advanced technology critical to national security.
FAO Global Assessment
Western countries have become increasingly cautious of China’s ambitions to lead in the tech and manufacturing sectors in recent years. Regulators in Europe and the U.S. are restricting their foreign investment laws and oversights on Chinese merger & acquisitions. They might pass new laws and put higher scrutiny on Chinese purchases. However, joint ventures are an important way for American and European companies to expand their businesses in Chinese market. Those businesses will face increasing barriers to partner with Chinese firms and expand market share in China, especially in high-tech and manufacturing industries.
Related Links
- New York Times- Britain Holds Up China Aerospace Deal Over National Security
- New York Times- Canada Blocks Chinese Takeover on Security Concerns
- SPIEGEL- Chinese Expansion Has Germany on the Defensive
- Financial Times- Chinese auto supplier in €772m takeover bid for German rival
Analyst Bio
Weiting Li – International Policy Associate
Weiting Li is an international policy intern at FAO Global, where she focuses on international trade, technology, and environmental policies. Weiting is currently a second year graduate student pursuing dual master’s degrees in public policy at Georgetown University and Business Administration at University of Geneva. Prior to Georgetown, she was the assistant for government relations and working groups at European Chamber of Commerce in China. She graduated from Gettysburg College with a major in Sociology and a minor in Business.
