With eye on China, Germany tightens foreign investment rules

German Chancellor Angela Merkel attends the weekly cabinet meeting in Berlin on December 19, 2018. (Reuters)
Updated 19 December 2018
0

With eye on China, Germany tightens foreign investment rules

  • Germany agreed new rules on Wednesday to lower the threshold for screening and even blocking purchases of stakes in German firms by non-Europeans
  • The decision by Angela Merkel’s cabinet is a response to mounting concern that China’s state-backed companies are gaining too much access

BERLIN: Germany agreed new rules on Wednesday to lower the threshold for screening and even blocking purchases of stakes in German firms by non-Europeans, in a move to fend off unwanted takeovers by Chinese investors in strategic areas.
The decision by Angela Merkel’s cabinet is a response to mounting concern that China’s state-backed companies are gaining too much access to key technologies in Europe’s biggest economy while Beijing shields its own companies.
Under the new rules, which come into effect immediately, Berlin can intervene on grounds of public interest if a non-European investor buys a 10 percent stake in a company, sharply reducing the threshold from 25 percent.
“Companies like investing in Germany and it should stay that way. But we must be able to look carefully at who is buying sensitive infrastructure and what consequences that has,” said Economy Minister Peter Altmaier.
Germany introduced the 25 percent threshold in 2004 and expanded its veto powers in 2017. The measures are meant to protect vital infrastructure such as energy, water, food supply, telecommunications, defense, finance and transportation. The rules passed on Wednesday added media companies.
Highlighting fears that Germany is also a target for cyberattacks, the Office for Information Security has warned several German firms of increased Chinese activity, a newspaper reported earlier.
Some business organizations criticized the move.
“Germany must remain open to foreign investors,” said the BDI industry association while the DIHK Chambers of Commerce said the new threshold sent a negative signal to foreign partners.
“It is important to keep a balance ... and to use the instruments only after careful consideration,” said Joachim Pfeiffer, spokesman for economic affairs in Merkel’s conservative bloc, adding: “Sealing ourselves off is not the answer, it leads to a spiral of protectionism.”
So far, Germany has never blocked a stake purchase by a non-European company based on the shareholding threshold rules.
However, China’s Yantai Taihai dropped an attempted purchase of Germany’s Leifeld, a maker of tools for the nuclear power sector, after Berlin signalled in August that it would veto it.
In July, a German state bank took a stake in high-voltage grid operator 50Hertz to stop China’s State Grid buying it after it found no alternative private investor in Europe.
A Chinese Foreign Ministry spokeswoman said the new rules mentioned no specific country and that while ties were good, Germany and China shared responsibility to protect free trade.
“We hope Germany can create a fair, open market access environment and stable institutional framework for foreign companies, including Chinese ones, investing in Germany,” she said.
Among prominent investments in Germany are the 2016 purchase of German robotics maker Kuka by China’s Midea and Geely’s surprise purchase of almost 10 percent in Daimler in February.
European Union states agreed earlier this month to a far-reaching system to coordinate scrutiny of foreign investments in Europe, notably from China.BERLIN


Paris Air Show: After Boeing showstopper, Airbus seeks order bounce

Updated 19 June 2019
0

Paris Air Show: After Boeing showstopper, Airbus seeks order bounce

  • British Airways owner IAG signs letter of intent to buy 200 of its 737 MAX jets
  • Airbus is looking for up to 200 orders for the A321XLR, which is designed to open up new routes

PARIS: Airbus, reeling from the potential loss of a major customer for its best-selling A320neo as British Airways owner IAG placed a lifeline order for the grounded 737 MAX, prepared to hit back with more orders for its A321XLR on Wednesday.
The planemaker has been negotiating with US airlines investor Bill Franke whose Indigo Partners has also been known to place orders for multiple airlines within its portfolio and could reel it in for the Paris Air Show, industry sources said.
Airbus declined to comment.
After weathering intense scrutiny over safety and its public image, Boeing won a vote of confidence on Tuesday as IAG signed a letter of intent to buy 200 of its 737 MAX jets that have been grounded since March after two deadly crashes.
The surprise order lifted the energy of a previously subdued Paris Airshow, where the talk had been of the possible end of the aerospace cycle, given the issues at both Boeing and Airbus as well as geopolitical and trade tensions around the world.
Australia’s Qantas Airways said on Tuesday it would order 10 Airbus new A321XLR jets and convert a further 26 from existing orders already on the Airbus books.
Airbus is also in talks with leasing company GECAS and has been trying to secure an eye-catching order for the A321XLR from American Airlines, though the world’s largest carrier does not typically make announcements at air shows.
Airbus is looking for up to 200 orders for the A321XLR, which is designed to open up new routes.