World Economy

German Minister Ups Rhetoric Against China Takeovers

Sigmar GabrielSigmar Gabriel

China is strategically buying up key technologies in Germany while protecting its own companies against foreign takeovers with “discriminatory requirements”, German Economy Minister Sigmar Gabriel was quoted as saying on Saturday.

Gabriel, also vice chancellor and leader of Germany’s Social Democrats, heads to China next week after having ratcheted up tensions with Beijing by putting the brakes on the latest Chinese takeovers of German technology companies, Reuters reported.

In a guest column for Welt am Sonntag newspaper, Gabriel urged the European Union to ensure a level playing field and adopt a tougher approach with China.

“Nobody can expect Europe to accept such foul play of trade partners,” Gabriel wrote, adding that Germany was one of the most open economies for foreign direct investments.

In China, on the contrary, foreign direct investments by European companies are being hampered and takeovers are only approved under discriminatory requirements, he said.

“But China itself is going on a shopping tour here with a long list of interesting companies—with the clear intention of acquiring strategically important key technologies.”

Under German law, the government can block takeovers only if they jeopardize energy security, defense or financial stability.

Gabriel is pushing for a Europe-wide safeguard clause which could stop foreign takeovers of firms whose technology is deemed strategic for the future economic success of the region.

Despite her deputy’s tough words, Chancellor Angela Merkel views China as a strategically important partner, not only to do business with but also in foreign policy.

It remains one of Germany’s most important trading partners and 60 business executives will join Gabriel on his five-day trip. Germany automakers in particular have benefited from China’s rapid economic expansion.

This year to date, Chinese investors have racked up 47 deals to buy German targets with a total volume of €10.3 billion ($11.3 billion), according to Thomson Reuters data, compared with 29 deals worth just €263 million in the whole of 2015.

Deputy Economy Minister Michael Machnig told the Financial Times that Berlin was worried about takeovers that seemed to be driven by the Chinese government or were about gaining access to German technology.

“We need to have the powers to really investigate deals when it is clear that they are driven by industrial policy or to enable technology transfers,” he told the FT in an interview. “When necessary, in exceptional cases, maybe even to say we’re not going to allow them.”

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