Chinese Takeover of EU Tech Assets Set for Greater Scrutiny

Chinese investors have renewed their shopping spree for high-tech assets in Europe, but new rules from the EU promise greater scrutiny of such acquisitions, according to Bloomberg.

The technology sector in particular has been an important target as China is intent on developing its own semiconductor production to lessen its dependence on foreign technology. EU negotiators last week approved the first bloc-wide rules to prevent foreign investments from threatening national security, largely driven by unease over acquisitions by Chinese companies.

Under the new rules, authorities are likely to intensify their scrutiny of so-called dual-use technology that can be tapped by both the civilian and military sectors. France and Germany in particular are likely to train their eyes more closely on acquisitions from China. Chinese acquirers have been behind $4.4 billion-worth of European deals so far this year, up almost two times the volume for 2017.

Under the new law, EU governments will be allowed to request information and offer comments on a foreign direct investment in a particular member country. The nation in which the investment was planned would have to take any remarks and opinions into account when deciding on the deal. EU officials hope the mechanism will provide a broader overview of Chinese investment in Europe amid concerns that companies with indirect ties to the state are snapping up strategically important businesses.

The new rules still need official approval from the EU governments and the European Parliament. The legislation is on track to take effect at around the end of 2020.