June 4, 2020 / 2:00 PM / in a month

EU considers broadening scrutiny of foreign investments

BRUSSELS (Reuters) - The European Union’s executive has proposed broadening scrutiny of foreign investments in the bloc, according to a public draft document, part of efforts to shield more sectors from potential Chinese buyers.

FILE PHOTO: A European flag is seen outside the EU Commission headquarters in Brussels, Belgium November 6, 2019. REUTERS/Yves Herman/File Photo

Oversight of some foreign investments in EU states will begin in October, and the European Commission has proposed widening the scope, via a legal act, to new projects on defence, satellite communications and nuclear energy.

The draft, which will be adopted if EU governments do not block it by June 15, marks the latest step in EU efforts to resist what Brussels sees as predatory, state-backed Chinese competition to dominate industries and absorb EU know-how.

EU governments are also frustrated that China has not followed up a formal offer last year to open up its economy.

An EU-China summit planned for September has been postponed, in part because of the COVID-19 pandemic but also because of EU frustration at a lack of progress on increasing European investment in China.

From Oct. 11, when foreign takeovers are announced, EU governments will be obliged to share details with the Commission in areas such as the media, transport and communications.

If expanded, the review would include more projects linked to defence, a new EU satellite communications programme and a multi-billion-euro nuclear fusion project.

Projects already on the list include transport, energy and Galileo, the EU satellite navigation programme.

“The Commission has found that there are several other projects and programmes...which are essential for security or public order and which should therefore also be included,” the draft regulation said.

Transferring technologies to a non-EU country is seen as a risk to the bloc’s strategic interests in some technology that Chinese state-led firms have sought to acquire.

However, some EU nations that promote greater free trade may object. Others which have benefited from Chinese investment at home may also oppose the step.

Writing by Robin Emmott; Editing by Mark Heinrich

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