Sun. Nov 28th, 2021


Good morning and welcome to Europe Express.

A year after the block was tightened screening of foreign investments regime, the European Commission yesterday released some figures showing that most transactions are still going through. We will unpack the findings and what the challenges are when Chinese companies change their tactics to acquire European assets.

In economic news today, the commission publishes its assessments of each Member State’s budget plan for next year under the so-called European Semester.

Later tonight, the largest group in the European Parliament, the European People’s Party, will vote in a secret ballot on who should succeed Manfred Weber as group chairman next year. In the run are Roberta Metsola from Malta, Othmar Karas from Austria and Esther de Lange from the Netherlands.

Meanwhile, Austria arrives compulsory vaccination strategy is to gather support in neighboring Germany – at least in some parts of the country. We will examine the pros and cons and what further Covid-19 restrictions will take effect from today.

And Ireland’s Data Protection Commissioner, Helen Dixon, tells Europe Express what its strategy for 2022 is when it comes to dealing with big technology companies.

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Eye on Chinese investments

Not too long ago, Western countries boasted of the amount of foreign domestic investment they were attracting. Now they brag about how much they rejected, write Andy Bounds in Brussels.

Yesterday, the European Commission published its first report on the FDI selection regulation, which came into effect in October 2020. The report also examines actions by member states to curb what are seen as hostile takeovers of sensitive technologies or strategic assets by companies from outside the EU.

Both the bloc as such and nationally, Europeans followed the US and intensified their investigation into fears that Chinese groups could loot local technology from companies or use it to advance Beijing’s foreign policy goals.

About 18 countries now have an FDI screening system and another six are planning one. The outposts are Bulgaria, Croatia and Cyprus.

The commission only investigates sensitive transactions affecting more than one Member State or community programs such as the Galileo satellite system. It cannot block transactions itself, but can ask national regulators to do so.

In the past year, the commission has looked at 265 projects and set conditions or tried to block just eight. Officials have confirmed to Europe Express that they purchase of the Italian semiconductor company LPE by Shenzhen Investment Holdings.

On the national side, member states’ regulators looked at a total of 1,793 cases and 80 percent of FDI projects were approved without selection. Of those selected, only 2 percent were blocked and 7 percent aborted by one of the parties. About 45 percent of the cases involved U.S. buyers, and only 8 percent Chinese (although the Chinese share of FDI was only 2 percent).

But the regulation may need to be adjusted already, warned Noah Barkin, an expert on Chinese-EU investment at Rhodium Group, a US consulting firm.

“China is changing its approach,” he said. Chinese companies prefer to build their own factories in the EU rather than gain access by buying EU factories, which tend to attract scrutiny. “Greenfield investment has reached levels last seen in 2016,” Barkin told Europe Express.

Chinese companies are also looking for smaller deals and use foreign structures to avoid attention, he added.

“The EU must remain vigilant about the shift in how Chinese firms approach the EU market,” Barkin said.

The Wall Street Journal reported This month, Italian authorities discovered that the 75 percent stake in drone manufacturer Alpi Aviation had been sold via foreign vehicles to China Railway Rolling Stock Corp – a state-owned railway company – and an investment group controlled by the Wuxi municipal government.

However, examining transactions structured by foreign companies will require a very different level of resources, both at national and EU level. And that is unlikely to happen anytime soon, with commission officials acknowledging that they are already struggling with the volume of cases.

Must be wax

German officials have long ruled out compulsory vaccinations. But with the rate of vaccine hesitation still stubbornly high and new infections climbing, they change their tune, writes Guy Chazan in Berlin.

The leaders of a number of German states – Bavaria, Baden-Württemberg and Schleswig-Holstein – have now called for the establishment of a universal vaccine mandate, similar to the one in Austria. to introduce.

The Prime Minister of Hesse, Volker Bouffier, yesterday became the youngest regional governor to come out in favor of compulsory jabs. “I think it needs to happen to break these waves permanently,” he said. All previous attempts to increase the vaccination rate have failed, he said. “Either we go from wave to wave and set restrictions every time, or we succeed in raising the vaccination status,” he said.

Others, however, are more skeptical. “Mandated vaccinations will come too late to stop the fourth wave of coronavirus,” said Andreas Bovenschulte, mayor of the northern port city of Bremen.

Jens Spahn, the federal health minister, is also opposed.

Even without a mandate, pressure continues to build on vaccine supplies.

From today, employees will either have to show a vaccination certificate, proof that they have recovered from Covid-19, or show a negative test result to attend their workplace. The same goes for passengers on Germany’s buses and trains.

Some states go further.

Bavaria today introduces contact restrictions for the unvaccinated, stipulating that only five people from two households can meet, not children under the age of 12, vaccinated people and those who have recovered from Covid-19.

Thuringia, which has been particularly hard hit by the new wave, will close all clubs, pubs and discos, as well as Christmas markets, while restaurants will not be allowed to stay open after 10pm.

Meanwhile, case numbers continue to rise. Germany recorded 45,326 new infections and 309 deaths due to Covid-19 yesterday. The number of cases per 100,000 over seven days reached 399.8 and the number of free beds in intensive care units dropped by about 300 to 2,400.

Graph of the day: Against all odds

Line Manager of Purchasing Managers' Index, below 50 = a majority of businesses reporting a contraction showing that the Eurozone's business activity is rising to a 2-month high

Eurozone business activity picked up this month despite rising inflation driven by supply chain disruption, rising energy costs and a recovery in Covid-19 cases. The survey showed that services outperformed manufacturing for a third consecutive month, recording the strongest growth in activity for three months. (More here)

Go after big fish

The head of the Irish data privacy watchdog says her office will focus on high-risk cases next year, rather than pursuing every small complaint – in an effort to refrain from criticizing her alleged unwillingness to go to Big Tech, writes Javier Espinoza in Brussels.

A recent analysis showed how the Irish Data Protection Commission (IDPC) has had a large number of complaints against major online platforms that have not yet been resolved. (Read about it here).

Dublin has even received harsh criticism from its peers. Ulrich Kelber, head of Germany’s data protection watchdog, recently complained that his country alone has sent “more than 50 complaints about WhatsApp” to the Irish authorities, “none of which have been closed to date”.

Now the IDPC is fighting back.

Helen Dixon, the Irish data protection commissioner, told Europe Express she would make enforcing major technology cases a higher priority.

She said her office often gets caught up in individual complaints that do not amount to much, as she wants to dedicate resources to investigating cases involving Facebook or TikTok.

“Some of the complaints we deal with can take a lot of time, but they do not expose any systemic risks and there is no significant risk to the individual,” she said, adding that the watchdog will “push back” on such incidents.

Dixon said prosecuting data breaches by Big Tech was “certainly one of the sub-priorities”, but rejected accusations that she was not doing enough. She argued that the Irish government only became the chief enforcer after the adoption of privacy laws three years ago and that the system could only move at a certain pace.

However, Dixon is still facing fresh criticism. Yesterday, Austrian privacy activist Max Schrems accused the IDPC of trying forbid him of publishing material relating to a complaint against Facebook.

“They basically deny us all our rights to a fair trial unless we agree to remain silent,” he said.

The IDPC said: “As a matter of fairness to all parties, the integrity of the investigation process must be respected and the confidentiality of information exchanged between the parties must be maintained.”

What to watch today

  1. EU Commission publishes’ European Semester ‘on member states’ 2022 budgets

  2. Belarusian opposition leader Sviatlana Tsikhanouskaja speaks in European Parliament

  3. European People’s Party group in EU parliament elects new leader

Remarkable, quotable

  • Wirecard failure: Germany’s financial regulator, BaFin, will have to breaks ties with bank lobbyists and ensures that it does not receive orders from the Ministry of Finance under rules proposed by Brussels in the wake of the group’s scandal.

  • Political Advertising Rules: the I will reveal draft legislation aimed at limiting the use of social media practices such as micro-targeting and user profiles by forcing technology companies to share information about how they distribute ads and target people online, or face fines of up to 5 percent of their revenue .

  • Turkish roller coaster: The lira has suffered a historic retreat after President Recep Tayyip Erdogan praised a recent rate cut and declared his country waging a “war of economic independence”. (Full explanation here .)

  • UK booster boost: An early incitement campaign and broad immunity gained during earlier Covid-19 waves set the UK in motion another job of its continental neighbors.

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Today’s Europe Express team: andy.bounds@ft.com, guy.chazan@ft.com, javier.espinoza@ft.com, valentina.pop@ft.com. Follow us on Twitter: @AndyBounds, @GuyChazan, @javierespFT, @valentinapop.





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