Chinese buyouts

EU industry commissioner Antonio Tajani said in an interview Monday that important European businesses should be protected from possible takeovers by Chinese firms and other foreign entities.

Europe should create an agency to examine whether "an acquisition by a private or public foreign company represents a danger or not," Tajani told the German business daily Handelsblatt. A model for the agency could be the Committee on Foreign Investment in the United States.

The commissioner noted that China has the means to acquire substantial holdings in key European companies and could do so to gain access to their technological know-how or to exercise political leverage on EU member states.

"It is a question of investments, but behind that there is also a strategic policy, to which Europe should respond politically," Tajani added.

Rising investments

China's direct investments abroad have increased by 12 percent this year to a total of more than 37 billion euros ($50 billion). That value is expected to rise considerably in 2011.

Many of China's foreign investments to date have been aimed at securing access to raw materials in Latin America and Africa. But Chinese companies are also keen on buying businesses in Europe.

One example came in the summer of 2010, when Chinese company Geely purchased Swedish premium carmaker Volvo.

In 2008 Chinese maritime freight group Cosco assumed control of two shipping terminals in the Greek port of Piraeus. It said it plans to use the facility as a gateway for Chinese exports to Europe.

Chinese officials said last week that the government could invest in European sovereign debt to help the eurozone survive future crises if necessary.

Threat to open markets

German Economic Minister Rainer Bruederle rejected Tajani's proposal for a new regulator and warned European countries against placing excessive controls on foreign investment.

"Europe profits from the openness of its markets and offers attractive conditions for foreign investors," Bruederle said in a follow-up interview with the Handelsblatt.

Bruederle said that while some checks may be necessary to address "security and public order concerns," leaders should refrain from "hasty actions".

Bruederle traveled to China in October to promote Europe and Germany in particular as prospects for Chinese investors.

Legal controls

The debate between Tajani and Bruederle takes up an issue highlighted by a 2008 amendment to Germany's foreign trade law.

The amendment allows the economics minister to investigate or block the plans of a foreign entity seeking to buy 25 percent or more of the voting rights in a German company if the acquisition raises public order or security concerns.

But no foreign investment has yet fulfilled the requirements for the law to come into play, a spokesman from the Federal Ministry of Economics and Technology told Deutsche Welle.

Author: Greg Wiser (dpa, AFP, AP)
Editor: Sam Edmonds