Chinese deals spark EU worry

A senior European official Monday called for the creation of an EU watchdog to protect strategic sectors against takeovers by China. Chinese analysts dismissed the proposal as an act of "investment protectionism" that could jeopardize relations between the two sides.

European Industry Commissioner Antonio Tajani told the German business daily Handelsblatt in an interview that "Chinese companies have the means to buy more and more European enterprises with key technologies in important sectors" and added that Europe should establish "an authority tasked with examining foreign investments in Europe," according to AFP.

The Italian politician added that this potential watchdog could use a model based on the US Committee on Foreign Investment to determine "if the acquisition (of a company) with European know-how by a private or public foreign company represented a danger or not."

Tajani's comments came amid reports of a competition between China's Xinmao S&T Investment Corp Ltd and Italy's Prysmian SpA as both companies vie to take Dutch cable maker Draka Holding NV.

Bloomberg reported last week that the Chinese company has decided to proceed with a $1.3 billion bid for Draka that could unravel an agreed takeover of Europe's third-biggest cable maker by Prysmian.

"Europe must look to defend its companies the best way it can," Tajani told an Italian newspaper on December 2. "If China wins, Europe loses its know-how."

Shen Jiru, a researcher at the International Strategy Study Center of the Chinese Academy of Social Sciences told the Global Times that Tajani's idea was nothing more than "investment protectionism."

"I think it is unwise for a European official to prone such double standards," Shen said. "The EU has always claimed that China should further open its market to European enterprises."

"It is not a zero-sum game, when Chinese companies conduct takeovers and investments in Europe. As strategic partners, China and the EU can both benefit from cooperation," Shen added.