EU industry chief issues China warning ahead of Scholz's Beijing visit

Hamburger Hafen und Logistik AG

31/10/2022 18:04

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      EU's Breton says EU states need coordinated approach to
China
    

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      Warning comes ahead of Germany's Scholz visit to Beijing
    

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      Breton warns EU firms of investment risk in autocratic
regimes
    

  
    By Michel Rose
       PARIS, Oct 31 (Reuters) - The European Union's industry
chief said on Monday that     European governments and companies
must realise China is a rival to the EU and they should not be
naive whenever they approve Chinese investment.
    European Commissioner Thierry Breton's comments appeared to
be aimed in part at Germany, whose Chancellor Olaf Scholz will
visit Beijing on Friday.
    Over the past few years, the EU has passed a series of
defensive measures designed to better control investment from
state-owned foreign players, including from China, to ensure
rival powers do not gain more political leverage over the bloc.
    But many diplomats have been baffled by Germany's recent
decision to approve the sale of a stake in Hamburg's port, the
country's largest, to a Chinese company.
    In an interview with Reuters, Breton said he "preferred" the
decision to sell only 25% of the terminal to China's Cosco than
the original proposal, which would have sold China more than a
third and give it a blocking minority.
    "We need to be extremely vigilant," he said.
    Breton said that since the EU had labelled China a "systemic
rival" in 2019, the EU had adopted a series of measures they can
use to block investment in critical infrastructure.
    "It's up to member states to use them and change their
behaviour," Breton said.
    Scholz's visit to Beijing will be the first by an EU leader
since the start of the COVID-19 pandemic.
    He has faced criticism ahead of the trip for allowing Cosco
to invest in Hamburg, despite strong pushback from his governing
coalition partners amid concerns over Chinese influence over
critical infrastructure.
    French and German government sources told Reuters French
President Emmanuel Macron had suggested to Scholz they go
together to Beijing to send a signal of EU unity to Beijing and
counter what they see as Chinese attempts to play one country
over another. 
    But the German chancellor declined Macron's offer, the
sources said. 
    Asked about Scholz's trip, Breton said EU countries should
adopt a more united approach.
    "It's very important that the behaviour of member states
towards China... change in a way that's more coordinated than
individually-driven, as China obviously wants us to be," he
said.
    The more defensive EU approach towards China was the result
of Beijing's attitude during the COVID-19 pandemic that saw
Chinese autorities exploit countries' reliance on China for
equipments such as face masks to gain diplomatic leverage, he
said.
    "We can't forget all of that," Breton said. "The era of
naivete is over. The European market is open, with conditions."
    He also warned European companies tempted to increase their
investment in China that they did so at their own risk in a
country that was becoming more "autocratic".
    Germany's BASF  BASFn.DE  said it would cut the size of its
European sites "permanently" because of a triple burden of
sluggish growth, high energy costs and over-regulation, and
planned expansion in China instead.  urn:newsml:reuters.com:*:nL8N31R10U
    "There are uncertainties for the companies that make this
bet," Breton said. "There's a very important advantage in being
based in Europe, with the rule of law, company protection and
visibility," he said. 
 (Reporting by Michel Rose; Editing by Angus MacSwan)
 ((michel.rose@thomsonreuters.com; +33149495071; Reuters
Messaging: Twitter: https://twitter.com/MichelReuters))