Germany to Beef Up Protections for Critical Industries

NTD Newsroom
By NTD Newsroom
April 24, 2020Germany

BERLIN—Amid the economic crisis caused by the CCP virus pandemic, Germany is seeking to better protect its industries from unwanted takers, including from China. On Thursday, Germany’s parliament, the Bundestag, discussed a bill reforming its foreign direct investment rules.

Chancellor Angela Merkel’s government wants to make it harder for investors outside the European Union to acquire German companies active in “critical infrastructures” and “critical technologies.”

“The fact that we are a market economy does not mean that we can be naive when it comes to risks and threats to our vital national, economic, health, and other interests,” said German Economy Minister Peter Altmaier during the session of Parliament.

The new rules would apply to all transactions involving acquisitions of 10 percent or more of the voting rights in German companies active in “critical infrastructures” and “critical technologies.” And the threshold for a mandatory government review would be lowered from “actual danger” to “likely detriment” to public order or security.

Critical infrastructure includes not only defense, energy, telecommunication, and transportation sectors, but also water, nutrition, health, and even the finance and insurance industries. “Critical technologies” include artificial intelligence, robotics, semiconductors, biotechnology, and quantum technology.

Some German industry associations and the some in the opposition criticized the new rules as protectionism.

“To seal us off here won’t help us in this discussion,” said Reinhard Houben, a member of the opposition party Free Democrats.

Some observers see the new rules as a direct swipe against the Chinese Communist Party. Its “Made in China 2025” program seeks global dominance in critical infrastructure and technologies, and some are concerned China could use the current crisis to go on a shopping spree in Europe.

Under the old rules, the German government unsuccessfully tried to stop the takeover of German industrial robot maker Kuka through  Chinese appliance manufacturer Midea four years ago. Besides the transfer of intellectual property, some in the business and political community are concerned that the company has gained access to the customer data that is anchored in Kuka’s system—from the German automotive industry to aircraft manufacturers, for example.

The bill is expected to pass.

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