European companies and governments have collectively opposed the European Commission’s plan to review the company’s investment plans in China, and have expressed doubts about the feasibility of the plan.

Context and initial intention

The plan, announced by EU Commission President Von der Leyen in March last year and supplemented in a White Paper in January this year as part of the EU’s European Economic Security Package (ESS). This month, in a statement before her campaign for re-election, she doubled her emphasis on the intention of filtering investment. In the declaration, “We will complete the review of the filtering framework for foreign direct investment, establish a truly coordinated approach to export control and address the risk issue of foreign investment.”

The plan aims to “coordinate” with the mechanism launched by the United States last year to prevent capital from flowing into some high-tech industries in China. Specific proposals include screening investments in four high-tech fields of semiconductors, artificial intelligence, biotechnology and quantum computing.

Opposition from companies and associations

The German Federation of Industry (BDI) said in a written statement that the European Commission’s plans would “seriously interfere with corporate decision-making and international investment flows.” “German companies use foreign direct investment (FDI) to gain market share globally. These investments strengthen the German economy, secure employment and promote prosperity. Therefore, BDI opposes any new mechanisms to control foreign direct investment.”

In a document submitted by the industry association SEMI Europe, which represents the global electronic manufacturing and design supply chain, it is stated that “national controls on overseas investments of European companies are not the right policy path to economic security, as this would constitute a major interference to the company’s business decisions and international investment flows.”

BusinessEurope, which represents the national Chamber of Commerce of the EU member states, said it was cautious of “any non-sanctions-induced restrictions on foreign investment.”The organization wrote in its submission: “The potential cold impact should not be underestimated as it could have a significant impact on research and innovation, European companies’ global operations and foreign investment.”

In addition, companies from the Netherlands and Sweden have also expressed suspicion about the plan, which remains extremely unpopular among governments.

Government and Expert Opinions

According to diplomatic sources, only one of the 27 EU member states, Lithuania, has expressed its full support for the EU’s plans to censor foreign investment, while Lithuania is also the country with the most horrendous attitude toward China in the EU.

Tobias Gehrke, a geoeconomic expert at the European Committee on Foreign Relations, said Von der Leyen’s best chance of passing the program was to use it as a “coding” for a “political deal” with the United States.

Economic data and investment status

A recent report by the Paris think tank French Institute for International Relations (IFRI) found that European investments in four areas in China were “very limited” and “represented 2% to 4% of total capital annually” between 2019 and 2023.

American Impact on European Companies

Some countries believe that the plan would be completely “surplus” if the European Commission could implement a unified, EU-wide export control system in the European Economic Security Package.

In addition, relevant EU officials have also pointed to the U.S. oppression of the Dutch chip manufacturing equipment giant ASML, saying the measures forced ASML to stop shipping its advanced light engraving machines to China.