Last week, the Handelsblatt newspaper reported that the German Finance Ministry was preparing a bill that would significantly curb Chinese investment in Germany. Berlin intends to tighten state control over incoming investment, explaining this by a desire to prevent technology leakage. The “green” head of the Ministry of Economy, Robert Habek, has long been known for his skeptical attitude towards China. But this time, Habek’s department’s initiative unexpectedly received support from the ruling Social Democrats, who have so far shown restraint in limiting economic cooperation between Germany and China. “The changing geopolitical situation also forces us to adapt our tools,” said SPD economic policy spokesman Bernd Westphal.
Berlin goes the way of Washington, even if it is to the detriment of the German economy
German companies view these plans with apprehension, warning that the proposed restrictions could send “a devastating signal to investors” by triggering capital outflows from Germany. China is already reducing its investments in Europe and last year they reached their lowest level in ten years. Among the reasons is fear of government restrictions and bans on mergers and acquisitions. In this sense, Chinese investors are also reviewing their European strategy: now they prefer not to buy European companies, but to open branches of their own companies in EU countries.
The adoption of a new law in Germany may not only reinforce this negative trend, but it will also not have the best consequences for the German economy itself. According to the German publication DWN, the departure of Chinese investors will deprive European countries of the capital needed to create new high-tech companies and, therefore, of the basis for economic growth.
But Brussels is in no rush to impose restrictions, as most EU countries, according to media reports, do not want to cut economic ties with China.
