The European Parliament and EU countries are implementing measures to stop competitors like China from “weaponising” their investments.
The European Union’s member states along with the European Parliament have reached a consensus to bolster the examination of foreign investments within the bloc amid growing concerns over investments originating from countries such as China.
While the Parliament advocated for an extensive review of foreign direct investments, the ultimate decision-making authority resides with the EU member states. Now, both bodies have consented on a unified text that reinforces the current regulations.
Following this agreement, compulsory screenings will encompass areas such as military technology, artificial intelligence, quantum computing, semiconductors, raw materials, transportation and digital infrastructures, as well as electoral systems.
“By mandating all member states to establish screening frameworks and enhancing collaboration among them, the regulation eliminates potential gaps that could permit high-risk investments into the internal market,” stated MEP Bernd Lange, chair of Parliament’s trade committee.
He further highlighted that Parliament’s negotiators “effectively pushed for a wider mandatory coverage of national screening systems, guaranteeing that investments in especially vital sectors will be scrutinised by all member states.”
Protecting Europe’s economic integrity
This updated framework originates from an initiative by the European Commission aimed at strengthening the EU’s economic safeguards.
“Recent months have made it evident that the geopolitical landscape has shifted considerably,” an EU diplomat remarked on Thursday. “Trade can no longer be regarded merely as a neutral exchange between independent economic agents.”
He added that several recent incidents “have revealed that economic tools have been exploited as instruments against Europe for geopolitical objectives.”
In September, the Netherlands placed the Chinese-owned chip manufacturer Nexperia, which is based in the country, under state supervision due to fears that essential technical knowledge from its European sites might be transmitted back to China.
In response, Beijing restricted chip exports to Europe, posing a risk to the EU’s automotive sector, which depends heavily on these components. Although a US-China agreement later reinstated these exports, tensions persist between Beijing and The Hague.
The EU has maintained a cooperation mechanism regarding foreign direct investment screening since October 2020, despite encountering substantial opposition initially.
“At first, some economic stakeholders across Europe were hesitant to adopt such screening procedures,” a parliamentary insider told Euronews. “For them, investment matters are crucial, and the associated risks are not always fully acknowledged.”
According to EU regulations, the Commission may request information and provide opinions but lacks the power to compel a member state to review or block an investment.
Moreover, a 2023 regulation introduced a fresh screening procedure targeting non-EU subsidies awarded to companies operating within the bloc—another measure that intensifies focus on China.