AbroadThe number of Chinese business deals in Europe has fallen sharply in the past two years. This was stated in a report from the European Commission. It also shows that some governments within the European Union are still slow in examining foreign deals and investments. Among the EU countries, 24 have rules or regulations in preparation for controlling investments from abroad. Bulgaria, Croatia and Cyprus are not there yet.
Mergers and acquisitions in China fell 63 percent last year compared to the previous year. In addition, they represented only 2.5 percent of the total number of deals. That was 4 per cent a year ago. This decline does not appear to be caused by the coronavirus pandemic, as it began in November 2019, two months before the first coronavirus restrictions. Also, Chinese deals have not rebounded significantly as economies reopen.
EU member states have long expressed concerns about Chinese investments and set rules that require foreign investors to notify deals or projects. This pertains to projects that may relate to sensitive sectors such as defense or critical technology. In 2019, for example, Germany abandoned a Chinese bid for a machine tool manufacturer.
Foreign direct investment in the European Union fell to 98 billion euros last year. This is 71 percent less than the previous year and well below the 335 billion euros that attracted the region in 2018. Last year’s drop is larger than the global drop in foreign investment, which fell to 885 billion euros. The number of foreign mergers and acquisitions fell by more than a third last year.
Sixteen countries have established rules for evaluating foreign direct investment, including France, Germany, Spain and Italy. Sweden, Belgium, Estonia, Greece, Ireland and Luxembourg are still working on the rules. The Netherlands and Portugal plan to amend the current rules.
Holland and Ireland
The report also shows that “significant divestments” occurred in the Netherlands last year, with foreign investment declining. In Ireland, investment, especially from the United States, has fallen sharply. Both countries are under pressure from the European Union to change their corporate tax rules.
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