Berlin is set to make foreign investments in Germany’s strategically important sectors more difficult, after mounting concerns about Chinese business deals in recent years.
The amendment will be adopted at Germany’s Cabinet meeting Dec. 19, according to Handelsblatt.
Examples of firms that could involve national-security risks include defense companies, IT firms, and food producers.
The German government would have the power to veto bids deemed to endanger national security.
Berlin has become increasingly worried about foreign takeovers of German companies, especially by Chinese investors.
In July 2017, Germany’s Cabinet adopted a directive to allow the government to investigate a wider range of companies with foreign bids to acquire, such as those operating in “critical infrastructure,” according to the Financial Times. Additionally, the directive allowed the government a longer investigative timetable to review any takeover.
The German government also was alarmed in July 2018, when China’s State Grid Corp., a state-owned electric utility supplier based in Beijing, tried to buy a 20-percent stake in Germany’s 50Hertz, one of four transmission-system operators for electricity in the country. According to Handelsblatt, Germany’s federal government couldn’t examine the acquisition because the stake involved was below the 25-percent threshold.
According to data from Berlin-based think tank Mercator Institute for China Studies (MERICS), China’s foreign direct investment in the EU reached 35 billion euros (about $39.6 billion) in 2016, with Germany accounting for 11 billion euros (about $12.4 billion) or 31 percent.
In 2017, Chinese investment in the EU dropped to 30 billion euros (about $33.9 billion), but it was still the second-highest level ever recorded. Germany accounted for 1.8 billion euros (about $2 billion), or about 6 percent.
China has long wanted to transition the country from a low-wage manufacturing base to a tech-manufacturing powerhouse that can rival Western counterparts. It is a tactic under China’s economic blueprint, “Made in China 2025.”