Germany's New China Strategy Could Lead to More FDI Scrutiny, Decoupling, Law Firm Says
A new German strategy toward China could lead to more strict scrutiny of Chinese-related investments, Cleary Gottlieb said in a Jan. 9 client alert. The strategy, which hasn’t yet been released, is expected to “focus on decoupling Germany’s economy from China,” including in critical supply chains and key technologies, the firm said, and could lead to an outbound investment screening tool in certain “security-critical areas abroad.” Even if the country’s foreign direct investment regulations are “unchanged” by the strategy, it likely still will have some impact on the country’s investment screening decisions and could lead to more “strict scrutiny of foreign direct investments from or into China,” the firm said.
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Cleary Gottlieb noted that Germany “seems to be less concerned” about FDI from the U.S., Canada, the U.K. and other close allies, even in “rather sensitive industries.” The country’s FDI reviews for allies are still “rather swift and such investments do generally not seem to raise concerns,” the firm said.