Major European powers are getting increasingly anxious about capital flowing in from the giant in the east. Earlier this week there were reports that Germany, flanked by Italy and France, had demanded action by the European Commission to bolster existing rules that allow EU states to block foreign acquisitions of European companies.
EU leaders decided in June to consider “screening” investments by state-owned Chinese firms and France, Germany and Italy have backed the idea of allowing the EU to block Chinese investments.
Two letters one in July and another in February have been sent to Brussels. Although no countries or firms are mentioned by name, recent takeovers by Beijing in Europe are seen to be the target. The powers would be reinforced for planned non-EU acquisitions of all companies viewed as strategic and in cases of takeovers funded by the state or its agencies.
Germany already tightened criteria for overseas acquirers seeking to buy domestic companies in tech-heavy industries. In June Berlin broadened the remit of an existing law which currently enables the government to block a non-European Union (EU) buyer from acquiring more than 25 per cent of a German company if such a move is deemed to threaten public order or national security.
The expanded powers now allow ministers to investigate deals affecting companies that are considered to provide “critical infrastructure,” in particular, those producing software for utilities, payment, medical and transportation systems.
In 2016, Chinese foreign direct investment in the EU jumped 77 per cent to over 35 billion euros. Germany was by far the biggest recipient, with over 11bn euros. Last year, China bought German robot maker Kuka. In 2015, ChemChina purchased one of the world’s most famous tyre manufacturers, Italy’s Pirelli — 164 Chinese companies bought or took over European enterprises during the first half of 2016, compared to 183 Chinese takeovers in the whole of 2015, according to a report by Ernst & Young.  
Sensitivities about foreign take-overs aren’t limited to the actions and designs of the world’s number one manufacturing nation, however.
Last month a major row broke out between France and Italy, after new French President Emmanuel Macron blocked the sale of Stx — France’s largest naval shipyard — to Italy’s Fincantieri (temporarily) nationalising the company instead. Macron invoked — as Europe does with China — strategic interests, namely industrial and military.
The move ignited age old rivalry between the neighbours that's also now playing out over immigration and control of energy in north Africa. Italians feel they have played by the EU rules and until this acquisition the traffic has been pretty much one way.
French financier, Vincent Bollore, with about 8 per cent of the capital is already the second largest shareholder in Mediobanca, Italy’s leading Italian business bank. He recently acquired control of Telecom Italia, highly strategic from the industrial and national security point of view. Bollore also aims to take control of Silvio Berlusconi’s Mediaset, which dominates in private broadcasting, advertising and film distribution and is a major player in publishing too.
Over the past six or seven years, French companies such as Louis Vuitton Moet Hennessy (LVMH) have taken over some of the most prominent Italian luxury goods and fashion brands, including Bulgari, Pucci and Gucci, which deliver highly valued export earnings.
Italian economist Enrico Grazzini, who sees the EU as a cover for the biggest European powers to hold sway over the weaker members, says: “We need to defend ourselves: Without these companies, Italy will not count for anything in Europe and the world. Our kids will be forced to beg for work abroad.”
The Greeks know better than any other European nation about selling out to foreign capital. The whole operation to strangle Greece was managed by the IMF and the EU to rescue French and German banks who’d made a killing with their reckless loans, knowing it was a one-way bet underwritten by Greek workers and ordinary people of Europe. But if in finance the French can keep their head up high in the finance sector, Germany’s overall sway, especially in manufacturing is overwhelming.
German companies could invest as much as 500bn euros in the rest of the euro area in the next decade, according to one study. The research, published in 2014 by the Luiss School of European Political Economy points that “This would absorb the total capitalisation of entire countries, with significant political consequences. Large chunks of national industries could become a part of productive systems whose decision-makers would remain in Germany.”
It further noted that cheap labour was a “decisive element” in German industry shifting investment abroad. Firms face increasing difficulties in finding enough skilled workers in Germany, especially in sectors which are high-energy consumption (Germany is a net importer) and labour-intensive, industries such as glass, ceramics, stone processing, as well as metal production. The risk, the report continues, is that this will “create first and second-class societies” — the financial strangulation that was the hallmark of the Eurozone crisis that followed the global financial crash of 2008, will repeat itself in the wider economy, with “dire consequences” for the whole Eurozone.
The thrust of German policy for years — pursued directly and by the European Central Bank and other EU institutions it controls — is to cut wages, to suit the needs of its expanding empire in the Eurozone. Those who do not obey — Greece repeatedly, but also Italy in 2011, when Berlusconi was toppled, for example — find their democracy over-ruled and over-run.
So it is no wonder that Greece (Piraeus Port Authority was taken over by Cosco Shipping, China's largest shipping company in 2016) and a number of the poorer EU members have been courting China enthusiastically, as Beijing seeks to build investments along the “silk road” route in eastern and south-eastern Europe.
Certainly, it is not clear why Chinese control is particularly pernicious compared to any other foreign power, nor the fact that acquisitions by state-controlled organisations (any additional concern in Europe) make it any worse than privately capital.
One may wonder whether why it is seen as more damaging for national assets to be taken over by German money, which sees the former eastern bloc as its backyard? And shouldn't weaker powers take a leaf out of the history books that show is always wise to play two great powers off one another and let that imperial rivalry to try to get the best deal. Rather than give one country automatically the edge (Germany doesn’t count as “foreign” to any other EU country).
Ultimately though, no nation or people should have to accept foreign overlords, whether from the US (still by far the largest owner of capital, 41 per cent, in the EU) Japanese, Chinese or Germans. Each and every EU country is wealthy enough to provide for its people — if capital is mobilised and directed to suit human need not greed — through fair taxation and an end to tax avoidance of Greece ship magnates, former Italian prime ministers and large corporations like Apple and Amazon.
But also if the chains of the economically illiterate austerity policies — which in EU and Eurozone set public deficits and public debts to arbitrarily low levels — are broken, to allow public investment to drive economic development and fund public services.
Grazzini believes Italy — whose zombie economy suffers 11 per cent unemployment, rising to a third of the 15-24s — is now facing an existential threat: “If we sell the few industries and strategic businesses that remain here, there will be no future for Italians. It is necessary to regain national sovereignty, because without sovereignty, without decision-making power, there can be prospect of neither development nor democracy.”