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An end to ‘European naivety’ as Trump’s China pushback goes global



Donald Trump China
President Donald Trump and China’s President Xi Jinping (not
shown) make a joint statement at the Great Hall of the People on
November 9, 2017 in Beijing, China. Trump is on a 10-day trip to

Thomas Peter-Pool/Getty

  • The European Union says it is ready to work together on a
    tough new system to scrutinize investment out of China.
  • Now there’s an end to “European naivety,” the pushback
    against China has expanded globally in 2018.
  • Europe, with almost twice as much Chinese investment as the
    United States, is playing catch-up with the rest of the world
    following the US government’s clear shift to rivalry with China
    under the US President Donald Trump.

SYDNEY, Australia — The European Union on Tuesday came together
to put an end to its gaping hole on the security and intentions
of Chinese investments in the 28-state bloc.

The decision brings the Europeans closer to the recent shift in
US policy under the Trump administration which deems China a
clear strategic challenger, and an unrivalled economic spy
partially responsible for shifting some
$US600 billion of intellectual property
out of the US economy

The EU has come up with a provisional playbook that will guide
and coordinate the 28 members of the bloc on foreign investment —
most specifically targeting investments out of China,
Reuters reports.

The European Parliament and the holder of the rotating EU
Presidency, the Austrian government, made an agreement on
Wednesday to set up an EU-wide monitoring of China’s “opaque”
state-owned giants that have been enthusiastically buying up
European technology companies and infrastructure assets.

“Opaque state-owned enterprises or private firms with close
government links have been buying EU firms using cutting-edge or
dual use technologies and strategic infrastructure assets which
could have a potential impact on the EU’s security or public
the EU said in a statement.

Negotiators for both the European Parliament and the EU’s 28
struck the deal to better protect
the union’s strategic
technologies and infrastructure, such as ports and energy

An end to European naivety

Merkel xi
President Xi Jinping and German Chancellor Angela Merkel shake
hands during the official welcoming ceremony for the panda couple
Meng Meng and Jiao Qing at the Zoologischer Garten zoo in

Emmanuele Contini/NurPhoto via
Getty Images

Following an intensification of Chinese investment, the European
Commission-run system will determine the risks to vital
infrastructure or whether
indigenous innovations are being targeted by foreign agents or
as claimed recently in the United States.

The European Parliament’s top negotiator Franck Proust, told
Reuters that Europe was finally waking up to a threat that the
rest of the world’s major economies had already crystallized.

“It will mark the end of European naivety,” Proust said.

“All the world powers — the United States, Japan, China — have a
method of screening. Only Europe does not.”

A major hurdle is that more than half the EU member-states have
no shared mechanism for thumbing through foreign investment, nor
has there ever been a coordinated security or risk assessment.

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Europe is composed of many different states with vastly differing
economies, interests and concerns.

Often when they try to balance the risks and attractions of
Chinese investment, they come up with wildly differing

Espionage in all but name

eclipse china
partial solar eclipse is seen above a ridge of roof as the sun
sets on August 11, 2018 in Xi’an, Shaanxi Province of

VCG via Getty

The proposed new law does not single out China by name, but the
nod to state-owned enterprises and secretive technology transfers
are glaringly clear references to Beijing.

According to FBI director Chris Wray,
no country even comes close to China
in terms of corporate
and foreign espionage.

And investment often lays the perfect foundation.

In testimony given in May
to the US House of Representatives’
Foreign Affairs Committee, Philippe Le Corre a nonresident senior
fellow in the Europe and Asia Programs at the Carnegie Endowment
for International Peace, noted that from $840 million invested in
2008, China’s annual FDI in Europe grew to $42 billion in 2017.

“Although the United States and the EU do not always speak with
one voice, they should coordinate and present a united front as
Chinese capital continues to flow towards the European
continent,” Le Corre said.

According to Bloomberg
, China’s total European investments,
including mergers and acquisitions (M&A) and greenfield
investments, have come to $318 billion. By the beginning of
April, China had taken over around 360 European companies. That’s
45% more than Chinese investment in the US between 2008 and 2017.

The proposal, demanded by France, Germany, and the former Italian
government still needs the support of the 28 EU states when they
meet again in December.

There will be some opposition

greece cosco
of coloured shipping containers are seen at the freight terminal
at Piraeus port, operated by Piraeus Container Terminal SA (PCT)
on October 19, 2018 in in Piraeus, Greece. Chinese shipping giant
Cosco said it has ambitious plans for the Greek port of Piraeus,
including a boost on already-bustling container and car piers but
also five-star hotel expansion. Cosco has already invested close
to a billion euros ($1.15 billion) in Piraeus over the past
decade, officials said, and plans to add another 298 million
euros over the next five years.

Bicanski/Getty Images

In the EU neighborhood, Switzerland is a Chinese FDI magnet
ChemChina’s acquisition of Syngenta, an agri-business giant, that
concluded this year for $46 billion
, the single-largest
acquisition by a Chinese company, ever.

Cyprus, Luxembourg, Malta, Portugal, Cyprus, and Greece all have
cause to welcome Chinese investment.

Chinese maritime investment has been particularly focused in
Greece and Portugal.
Greece’s historic port of Piraeus is now majority owned by
China’s COSCO Shipping

“State-owned enterprises from China have initiated more than two
thirds of Chinese investments across the European continent.
Chinese sovereign funds or state banks have financed other deals
by private investors, illustrating Beijing’s use of
state-directed, market-distorting, mercantilist policies,” Le
Corre told the House of Representatives.

Parliament will vote on the proposal in February or March.

“Member states will retain the power to review and potentially
block foreign direct investment on security and public order
grounds,” The EU confirmed in a statement.

Commence global pushback

china police
police officer stands guard to maintain traffic safety at the
site of the New Year’s Eve stampede in Shanghai on January 3,

Wang Zhao/AFP/Getty

The move is part of a broader global trend, as individually both
Germany and France, Australia, Canada, and New Zealand have begun
to push back against the machinations hidden within the deluge of
Chinese money.

Europe has essentially been playing catch up with thew rest of
the world following the US government’s clear shift toward acute
rivalry with China.

Richard McGregor, a China expert and senior fellow at the
Sydney-based think tank the Lowy Institute
, said Australia’s
decision to reject a $13 billion bid for Australia’s dominant gas
pipeline network would have given a single foreign company
monopoly control of most of the country’s pipelines.

“If you’re going to develop some kind of internal resilience in
Australia you’ve got to push back against China. There’s no nice
way of doing it and you might pay a price at some stage,”

McGregor said at a UBS conference
here on Monday.

In Malaysia, the new old
Prime Minister Mahathir Mohamad has suspended or canceled
billion in Chinese-funded projects since his election victory in

Nations from Africa to the Pacific have taken notice after

China took a controlling stake in the Sri Lankan port of
because it could not service its debt.

Zambia has been left with little choice but to hand over control
of its international airport as well as a state power company to

Anti-Chinese sentiment
there, stoked by opposition groups,
has been threatening to boil over as lucrative contracts are
handed over to China and the government continues to binge-borrow
from Beijing.

Myanmar is trying to negotiate its way out of a gigantic
Chinese-funded deep-water port and industrial zone on the Bay of
— from one that was proposed to cost $7.3 billion to a
more modest development that would cost $1.3 billion — in a
possibly forlorn attempt to avoid what Western analysts have
taken to calling the diplomacy debt trap.

Vice President Mike Pence
has been the Trump administration’s
point man, most recently seeking protracted US counterefforts in
the Pacific.

A few months after the US began imposing stiff tariffs on Chinese
imports —
now valued at $270 billion
— the National Defense
Authorization Act,
passed in August and named for the late US Sen. John McCain of
, stressing a “whole of government” response to the
China threat.

The act comes at China hard on influence operations and the
high-technology industrial threat, on the South China Sea and
concerning the status of Taiwan.

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