Originally published November 2021.

In recent years, Chinese companies have been substantially increasing their investments in the European Union. From the vineyards of Bordeaux to robot manufacturers in Germany and construction machinery makers in Italy, these companies have been on a buying spree of unprecedented proportions.

In the EU, the rapid growth has fuelled fears about the impact of these investments on jobs, technology and Europe’s long-term industrial capacity, sparking calls for more oversight. In this context, some see the investment screening mechanism the EU put in place in 2019 as targeted at Chinese companies.

During the pandemic, growing concerns that vital European technology and know how could be vulnerable to foreign takeover because of the economic downturn led the European Commission to issue guidelines for its member states. To bring greater clarity to the situation, the EU has negotiated a deal with China – the Comprehensive Agreement on Investment – to replace the current 26 individual country agreements that exist between all individual member states except Ireland.

The agreement is currently blocked for political reasons, following tit for tat sanctions related to the EU’s concerns about human rights violations in Xinjiang province. But the debate on how best to adapt to this new context is unlikely to go away.