As Chinese investors become increasingly concerned about the screening process adopted by the European Union, China’s ambassador to the bloc said it should avoid using practices that might be seen as discriminatory.
“You know companies, capital, they’re very skittish,” Zhang Ming said in an interview at the Chinese embassy in Brussels.
“As soon as they hear ‘screening’ and ‘oversight’, their hearts start racing. They want to wait and see.”
His comments came after the EU introduced new rules on the screening of foreign investment on April 1, in a move that some in Europe said was a response to years of Chinese investment in strategic sectors, like energy and hi-tech, across the continent.
The new mechanism requires the sharing of information about non-EU investment in critical sectors and allows EU member states to question deals they might perceive to be detrimental to the bloc’s interests.
Zhang said he would continue to press the EU on its investment screening process to ensure it respects market principles.
After some tense negotiations, the publication of the statement – which included pledges to finalise a long-awaited bilateral investment agreement before the end of next year and a commitment to greater openness towards foreign investment – was seen by many EU leaders as a breakthrough.
“Negotiations have been difficult, but ultimately fruitful,” European Council President Donald Tusk said about the deal.
Zhang said that although the summit had shown China-EU relations remained strong, he still had work to do to assuage the concerns of Chinese investors.
European investment in China rose 25 per cent year on year in 2018 to US$10.4 billion, according to official Chinese figures. In contrast, Chinese investment in Europe fell 40 per cent in the same period, according to a study by the Mercator Institute.
While investment screening was not the only reason for the dip, it was a cause for concern, Zhang said, which “is why we are watching it”.
“Of course, investment screening is an internal matter for the EU,” he said. “I can’t make irresponsible remarks, but I hope the EU can remain open and welcome foreign investment, including Chinese investment, and at least not discriminate.
“Discrimination is not right … [but] I believe Europe will not do this.”
He said also that he hoped the EU would remain impartial towards Chinese investors.