The European Union’s investment screening framework and China—a complicated picture

Abstract

This paper is focused on the inception of the European Union’s investment screening regime and the operation of the EU’s screening mechanism as gleaned from the European Commission’s annual reports. We first demonstrate that political discussions in Europe on the need for a screening mechanism were informed by a number of high-profile projects with Chinese involvement in the mid-2010s. While these were the primary impetus toward the creation of a screening regime, we then show that Chinese investments do not feature disproportionately in light of the EC’s annual reports, and the landscape of the EU’s investment market has remained largely unchanging in recent years. We conclude that the decrease of interest by Chinese investors may be due to multiple factors rather than simply to a stricter investment environment in Europe and that the image of a threatening China is useful for rationalizing regulatory innovation in the EU. This latter also indicates that the EU is out of patience for China to render its market more welcoming toward European investors and instead chooses to restrict China’s access to its own market.