Germany Mulls Softening Scrutiny of Chinese Investments: WSJ

(Bloomberg) -- Germany is considering scaling back plans to tighten government screening of Chinese investments, the Wall Street Journal reported.

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A decision to ease back from a planned foreign investment-screening law had become likelier due to fears that scrutiny on Chinese investments could hurt Berlin’s efforts to revitalize Germany’s economy, the newspaper said, citing people familiar with the plan who weren’t identified.

The plan for the bill, described in an economy ministry paper seen by the WSJ, proposed giving the government powers to screen foreign investments for security risks. The measure would allow the government to review new types of greenfield investments, including quantum technology, sophisticated semiconductors, artificial intelligence and critical infrastructure, the WSJ reported, citing the document.

A spokesman for Germany’s economy ministry in Berlin said he couldn’t confirm the assertions made in the report.

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The government has revised and expanded the legal framework for investment screening several times to meet increased security requirements, and the law guarantees the protection of German and European security interests to a high degree without calling into question the nation’s openness to foreign investment, the spokesman said by email.

The changing global security situation and the growing risks of economic dependencies means the law requires revising, and that’s an ongoing process, he added, without giving a precise timetable. Germany is participating constructively in discussions about economic security at the European Union level, he said.

The WSJ report said that Germany’s government also sought to include a provision allowing the screening of cooperation projects between German research institutions and foreign partners in critical areas.

A government spokesman declined to comment to the newspaper on the deliberations, but said that “investment screening is designed to avoid risks to security and public order in Germany. At the same time, it is important to remain open to foreign investments.”

--With assistance from Kamil Kowalcze and Iain Rogers.

(Updates with German economy ministry comments starting in fourth paragraph)

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