EU warns of Chinese takeovers amid staggered reopening
The European Commission worries that Chinese state-owned firms may pay less for financing to fund business operations within Europe
Brussels/London — The EU needs to be “vigilant” about Chinese takeovers if the bloc’s economic recovery from the Covid-19 pandemic lags behind, executive vice-president of the European Commission Margrethe Vestager has said.
“It is very important to be vigilant, especially in a situation where they may be sort of a staggered recovery, where some parts of the world recover faster than others,” Vestager said in an interview with Bloomberg TV on Tuesday when asked about the potential threat from China.
Vestager is weighing her options about tackling how some companies may use funding from foreign states to undercut European rivals or outbid them in mergers and acquisitions. Vestager said it is also important to strengthen EU tools to screen foreign direct investments.
“Europe is, indeed, open for business, obviously, but people who come here should come here for the right reasons to do business, not to come in with subsidies from third countries or to just take technology out of the company they acquire,” she said.
An EU initiative on foreign subsidies due to be published on June 17 seeks to assuage European businesses’ fears about Chinese state-owned firms that may pay less for financing to fund business operations within Europe.
Government support for companies has become a controversial topic in Europe as Vestager loosened rules that usually curb subsidies to businesses.
While Germany has opened the taps by spending nearly a trillion euros to help its companies, many other European governments “do not have the same opportunities”, she said in the interview.
A European recovery plan that could help fund other companies is essential “because otherwise we will not have a fast recovery that will save jobs”. A potential €500bn fund suggested by France and Germany is “a very important step”, she said.
“Of the essence here is, of course, speed, because now we see that from a problem of liquidity also comes problems of solvency,” she said. Recapitalising companies needs to be fast “because we should save valuable wealth within viable companies”.