Conservation package + China’s investments + Vestager

Dear reader,

May 9 as a day of remembrance has a checkered history in Ukraine; in the future, Europe Day will also be celebrated there on this historic date. Ursula von der Leyen is expected in Kyiv today to mark the occasion. According to a spokesperson, the EU Commission President intends to meet President Volodymyr Zelenskiy in the Ukrainian capital and reaffirm the EU’s full support for Ukraine in its defensive struggle against Russia.

Chancellor Olaf Scholz is traveling to Strasbourg today – he is using Europe Day to deliver a keynote speech to the European Parliament on the current situation and future of the European Union.

With pesticide regulations and renaturation legislation, the EU Commission wants to ensure the resilience of the food supply in Europe. But resistance is growing in the EU Parliament, with more and more voices calling on the Commission to withdraw the proposals. Skepticism is also high among member states. Some countries are calling for changes that harbor great potential for conflict. Lukas Scheid summarizes the state of the debate.

The EPP is also avowedly no friend of nature conservation laws. EPP leader Manfred Weber announced last week, among other things, that the party family would speak out in favor of a moratorium on “many legislative proposals” of the Commission. The SPD MEP Maria Noichl sharply criticizes this position: In her position, she accuses the EPP of putting the brakes on numerous progress issues. The EPP is acting anti-European, anti-science and is catching votes from the right-wing fringe, Noichl writes.

If you enjoy reading Europe.Table, please feel free to forward this briefing. If this mail was sent to you: Here you can test our briefing for free.

Your
Sarah Schaefer

EU nature conservation package: potential for conflict in the Council

By

Lukas Knigge

Opposition is growing in the EU Parliament to the two legislative proposals on pesticide reduction (Sustainable Use Regulation, SUR) and the renaturation of damaged ecosystems. More and more voices are rejecting the proposals outright and calling on the Commission to withdraw them.

Skepticism is also high among member states. Some countries argue that bans on pesticide use on certain agricultural land would slow down food production. The renaturation law, they criticize, promotes competition for scarce land and hinders the energy transition.

However, unlike in Parliament, calls for a complete halt to the legislative projects have not yet been heard loudly in the Council. They merely want to wait for additional data on the Commission’s impact assessment before negotiating further.

Member states call for more flexibility

Nevertheless, there are demands for adjustments to the legal texts, which harbor a great deal of potential for conflict. In various country constellations, member states want, among other things:

more flexibility in the prohibition of deterioration in the Renaturation Act;
more flexibility in peatland protection and rewetting to address local conditions;
the lifting of the ban on pesticide use in all “environmentally sensitive areas” – these include sites protected under the Water Framework Directive, Natura 2000 sites and sites notified by member states to the European Register of Nationally Protected Areas (CDDA).

No support for pesticide ban in protected areas

In any case, it is considered unlikely that pesticide use will be completely banned in protected areas. Both the Council and the Parliament agree that a general ban would hinder food production. Commission President Ursula von der Leyen has backed the idea.

The Federal Ministry of Agriculture (BMEL) is therefore also calling for improvements, including in the definition of sensitive areas. Germany has classified a particularly large number of agricultural areas as national protected areas and therefore hopes to escape a comprehensive ban on use for its farmers by redefining them. A compromise could be to allow only organic plant protection products in these protected areas.

States fear lengthy permitting process

The situation is more controversial with regard to the prohibition of deterioration of existing ecosystems. The Renaturation Act stipulates that the condition of habitats and the species that are to be protected by the regulation or are already under protection may not deteriorate. However, cases where “projects of overriding public interest” are planned for which there are no less harmful alternative solutions and the state takes compensatory measures are exempt. However, these must be reviewed and approved by the Commission.

This flexibility is not enough for some member states, who also predict a lengthy approval process. They are therefore insisting on adjustments. In the view of the Netherlands, the ban on deterioration outside Natura 2000 areas overshoots the regulation’s goal of initiating restoration measures on 20 percent of the land and lake area by 2030.

Nature conservation vs. energy transition

The Dutch government fears “unacceptable consequences for society”, for example in the construction and maintenance of infrastructure, housing, and the implementation of the energy transition, according to a letter from the Dutch Ministry of Agriculture.

The Commission’s proposal for a regulation, it said, was at odds with the RePowerEU targets, which are intended to speed up the expansion of renewable energy by, among other things, cutting red tape and speeding up permitting procedures. The Netherlands is therefore in favor of only prohibiting significant deterioration and maintaining more flexibility in achieving the targets. Not each individual site should be considered, but the situation in the whole country. The same applies to the rewetting of peatlands. Here, too, the Dutch advocate more national individuality in implementation.

Outcome-based or effort-based approach?

The Federal Ministry for the Environment (BMUV), which is responsible in Germany, supports the Commission’s proposal. It does not see a conflict between RePowerEU targets and nature conservation. In addition, the legislative text represents a “good balance of effort-oriented and result-oriented obligations”, according to a spokesperson. The Netherlands apparently sees things differently.

It is true that the proposed legislation states that member states can act more flexibly in large-scale restoration efforts by grouping habitat types according to the ecosystem to which they belong. However, “quantified area-based targets for groups of habitat types” are to be set here as well.

The Netherlands therefore still considers it a purely outcome-based approach and calls for stronger wording for the effort-based features of the regulation. However, pushing this through is likely to be difficult, as there are some powerful supporters for an outcome-based approach in the Council.

Europe investments: China increasingly focusing on batteries

China’s investments in Europe are decreasing. In 2022, the volume was down 22 percent year-on-year, according to a recent study by the Mercator Institute for China Studies (Merics) and the Rhodium Group. Compared to 2016, it even declined by 83 percent.

But China’s investments in the EU and the UK have not only slowed down; they have also fundamentally changed. It is now mainly greenfield investment, targeting one industry sector in particular: The production of EV batteries. Europe has thus become an important part of the global expansion of Chinese EVs, the study’s editors write.

Factories in Hungary, Germany, France

There are many striking examples: The Chinese battery manufacturer CATL is building a factory in Hungary for €7.6 billion, Svolt in Germany for around €2 billion or Envision AESC in France for another €2 billion. Battery investments are thus the new mainstay of Chinese investments in Europe, says the Merics/Rhodium study.

The important findings of the study are:

China’s global outbound investment falls to eight-year low.
Investments in Europe (EU+UK) also continue to decline.
Greenfield investments overtake mergers and acquisitions (M&A) for the first time since 2008.
China’s investments are concentrated in Germany, France, the UK and Hungary. More than two-thirds of the money flows to these four countries.
Target industries are consumer products and the automotive sector.
A sharp rebound in Chinese investment is unlikely in 2023, despite the end of Covid measures.

Greenfield instead of takeovers

The study shows two fundamental novelties in particular: The nature of Chinese investment has changed, as has the targeted sector.

For years, Beijing concentrated mainly on classic M&A operations, i.e., Chinese corporations’ mergers and acquisitions of German and European companies. For example, the purchase of the German robotics company Kuka, founded in Augsburg in 1898, by the Chinese electronics group Midea made headlines and sparked heated discussions.

But by now, Chinese greenfield investments in Europe have overtaken such M&A activities – for the first time in 20 years. Chinese greenfield investments, for example, amounted to around €4.5 billion last year – accounting for 57 percent of total Chinese investments. One reason: China’s companies are becoming increasingly competitive, as most recently CATL with a new battery technology.

China’s focus on EVs

This is followed by the second change: China’s greenfield investments in 2022 focused mainly on battery factories for electric cars. “Chinese firms are ploughing billions into the electric vehicle supply chain in Europe,” says Agatha Kratz, President of the US think tank Rhodium Group.

Max Zenglein sees this as an indicator of a global shift. “The changing investment patterns underline the competitiveness of Chinese companies, particularly in electric vehicles”, says the Merics chief economic expert.

This development holds dramatic news for the German car industry: BMW, VW and Co. are not only about to lose the huge sales market in China. Instead, China’s corporations seem ready to bring competition to Europe’s automotive sector.

Threat of dependence

Furthermore, China’s shifting direct investments also have effects that reach far beyond the direct regions and industries: They are not only important sources of income for the respective regions, creating numerous new jobs. More importantly, China’s corporations are also increasingly given a strategically important role on the continent. “They have become major players in Europe’s green transition“, explains Rhodium President Kratz.

This conclusion should give strategists in Europe who strive for more autonomy food for thought. Europe is also at risk of becoming dependent on China in the energy transition. This can work out well if both sides pursue a common goal. However, there are also cautionary examples, as a look at the fate of the German solar industry or the current developments among Germany’s heat pump manufacturers show. Michael Radunski

Vestager: Sovereignty Fund to facilitate risky investments

Commission Vice-President Margrethe Vestager is in favor of using the planned European Sovereignty Fund to provide incentives for private investors. “One of the ideas I am advocating is to be modeled on the European Innovation Council“, she said at a press briefing in Berlin. She said there is a need for an instrument that facilitates risky investments and works quickly.

The Commission intends to present a proposal for the Sovereignty Fund before the summer break. Within the authority, there are still intensive discussions about how this should be designed and what functions it should fulfill. Some in the Commission wanted to use the EU pot to offset subsidies from other member states, Vestager said. She has other ideas.

European unicorns

The European Innovation Council (EIC) has a manageable budget of around €10 billion and provides companies with equity capital. In this way, the EIC has already produced young companies with valuations in the billions – so-called unicorns.

Other support instruments, such as the Covid recovery program, were based on detailed national plans with milestones that took a long time to set up, she said. “If we could complement that with something that is much faster and where risks are assumed, then maybe we could be quite useful for some companies in Europe”, Vestager said. tho

Vestager cautious on industrial electricity prices

Competition Commissioner Margrethe Vestager has expressed caution about a push by German Minister for Economic Affairs Robert Habeck (Greens) for a discounted industrial electricity price. “You have to be very careful when you start subsidizing energy for companies that are in direct competition with other companies that don’t have the same opportunities“, Vestager told reporters in Berlin on Monday.

If energy is to be subsidized for large companies, it must be examined whether there is a disruption of competition, said the Vice-President of the EU Commission. However, too few details are known yet to be able to evaluate the proposal from the Ministry of Economics.

FDP against EU loans and national guarantees

In order to rule out distortions of competition in the EU internal market, Habeck had also brought a credit-financed European bridge electricity price into play. However, this was met with resistance from the coalition partner FDP yesterday. Last Friday, the BMWK proposed providing financially weak EU states with loans similar to the SURE short-time working program, backed by guarantees from the member states, so that they could temporarily subsidize electricity prices for their industries.

“A program like SURE was intended for absolute emergencies. We cannot and must not use such instruments in an inflationary manner“, said Michael Link, European policy spokesman for the FDP in the Bundestag yesterday. Link also reiterated the Free Democrats’ general rejection of a subsidized electricity price for German industrial companies: “I think Habeck’s proposal is wrong in terms of regulatory policy”. ber

Commission to present retail investor strategy shortly

The European Commission plans to present its new regulatory framework for retail investment at the end of May. The aim of the move is to achieve greater consistency in consumer protection provisions in European financial market regulation and to make capital market access easier and more attractive for retail investors.

In the legislative proposal, which is available to Table.Media, the Commission writes that investors should be able to make“informed investment decisions that meet their needs and objectives and are adequately protected in the single market by a coherent regulatory framework”, which it says will “enhance confidence and in this way bring citizens closer to capital markets and improve the participation of retail investors”. Brussels plans to present the new rules on May 24.

General ban on commissions to be dropped

After the debate on the retail investor strategy was overshadowed in recent weeks primarily by the dispute over a commission ban in investment advice, the EU authority is refraining from a general ban. However, commissions for pure execution transactions are to be prohibited in the future. In addition, the Commission wants to use new regulations to ensure that an advisor actually acts in the interest of the customer in the future.

In this context, the Commission refers to a recent Eurobarometer survey, according to which only 38 percent of consumers are convinced that the investment advice they receive from financial intermediaries is primarily in their best interest. This lack of trust is one of the key reasons leading to lower participation by retail investors, he said. The potential of the capital markets for this group of investors is thus not being exploited, the authority writes.

The economic policy spokesman for the EPP Group, Markus Ferber (CSU) spoke of a “balanced proposal” by the Commission in connection with commission-based advice. In the case of pure execution transactions, there is no good justification for commissions, Ferber said. However, a complete ban would only have led to many customers being excluded from financial advice. cr

Ukraine war: Beijing warns EU against sanctions

China has warned the European Union against sanctions against companies from the People’s Republic in connection with the Russian war against Ukraine. If such a step were to be taken, bilateral relations would deteriorate, the Chinese Foreign Ministry said on Monday. China will then take decisive measures to protect its interests, it said.

The EU Commission wants to launch the first sanctions against Chinese companies for supporting Russia’s war of aggression against Ukraine. Accordingly, the assets of seven Chinese companies in the EU are to be frozen, as several EU diplomats confirmed on Monday.

Proposal also targets Turkey

However, such a step must be decided unanimously by the 27 member states, which will discuss the proposal for the first time on Wednesday. In addition to China, the proposal also targets Turkey, the United Arab Emirates and countries in Central Asia and the Caucasus region.

With the Chinese companies, an extraterritorial component would now be added to the EU sanctions for the first time. In concrete terms, according to EU circles, it is planned to first create the legal possibility to restrict exports to third countries due to a suspected circumvention of sanctions as a deterrent. If this is not sufficient, certain exports could then actually be prevented in a second step. ari/rtr

Scholz invites Macron to Potsdam

German Chancellor Olaf Scholz will receive French President Emmanuel Macron in Potsdam on June 6. A joint dinner is planned, said government spokesman Steffen Hebestreit. According to the Élysée Palace, the meeting will discuss upcoming summits, in particular the Nouveau Pacte financier mondial in Paris on June 22-23, the European Council on June 29-30 and the NATO summit on July 11.

As previously reported, Macron will also travel to Germany from July 2-4 for an official state visit, visiting several regions. He is taking up an invitation from German President Frank-Walter Steinmeier to mark the 60th anniversary of the Élysée Treaty.

First, however, Macron will receive German Foreign Minister Annalena Baerbock in Paris on Wednesday. The Green politician will also attend a meeting of the French cabinet, the Élysée Palace announced. tho

Nature conservation in Europe – the dangerous blockade of the EPP

By Maria Noichl

Maria Noichl is S&D negotiator for the reform of the EU agricultural policy.

The EPP group, which includes the CDU and CSU in the EU Parliament, is blocking a current proposal on the sustainable use of pesticides. The chosen reduction targets are simply not feasible, they claim. Likewise, they reject the proposed law on nature recovery, according to a resolution of the group.

EPP leader Manfred Weber has also announced that the EPP will call for a moratorium against many of the EU Commission’s legislative proposals, so that no new laws are passed at all for one or two years.

As S&D negotiator for the reform of the EU agricultural policy, I am now reading in black and white what has already been felt in Parliament for months. Manfred Weber and Co. are putting the brakes on numerous progress topics. Sham cooperation and watering-down actions in the Agriculture Committee are now turning into open blockade. All this supposedly in the name of food security and the farmers in Europe.

No agriculture without pollinators

You only have to be able to count to five to be able to classify this action of the EPP in the European Parliament:

1. Perpetrator-victim reversal

Who protects whom? The goal of the EU Commission’s current initiatives is to preserve farming opportunities in the long term. Without pollinators, for example, there is no agriculture. But Manfred Weber and the EPP want to protect farmers from bee protection laws.

However, in order to enable fertile agriculture in the long term and to provide farmers with a fair income, the EU must protect bees. The S&D Group is committed to the protection of bees. Why is the EPP not working together on this? Climate change is the threat, the loss of species is bringing farmers to their knees – not Brussels with the urgently needed pesticide savings and laws for renaturation.

2. Refusal to work

The announcement that no new laws will be passed for one or two years is in fact a refusal to work. It is our task as European politicians to take responsibility and provide answers to current challenges.

Disputes with professional groups need commitment. With truck drivers, when it comes to mandatory breaks, with entrepreneurs, when it comes to data protection of employees, and also with farmers, who are worried about the future. This work must not be too difficult even for the EPP. The proposal of the EPP: “Brussels lets the farmers work now!”, is cynical and dangerous.

European solutions in agricultural policy

3. Anti-European behavior

The EPP, as the largest party family in Europe, wants to leave the solutions to the member states in times of crisis in agriculture. While in the financial crisis, the refugee crisis and the war in Ukraine, European solutions were always longed for, the EPP is now abandoning the farmers. The European project is weakened with such a refusal attitude of Manfred Weber. The fully communalized agricultural policy requires common solutions and the further expansion of European legislation for food cultivation.

4. Anti-science behavior

The basis for this un-European action is still doubting the urgency of the legislations. The European Parliament had declared a climate emergency in November 2019. Scientifically proven many times are the dangerous decline of pollinators such as bees, especially on agricultural land, and the need for renaturation.

If the EPP understood and accepted the scientific basis of the emergency, a call to sit tight for two years would be unthinkable. The inference is clear: The EPP denies the urgency and the scientific evidence that is the basis of our legislation.

5. Manfred Weber catching votes of anti-Europeans and climate change deniers

The sad core: The EPP, Manfred Weber and Co., are not concerned about agriculture, bees or water. It’s all about votes from the right and far-right fringes in the EU.

Challenges cannot be sat out

A few words to the many farmers in the European Union: Climate change, the extreme loss of species, the loss of soil fertility and the lack of water in Europe is a concrete, major threat to our agriculture. It is the task of the legislators to identify this and to take countermeasures, even sometimes strenuous ones. It is our duty to accompany farmers through these difficult times and to initiate a transformation process in which even small and medium-sized farms do not lose out.

When political party families like the EPP promise that they can sit out these challenges – don’t believe them. For the EPP, the harvest date is election day in the summer of 2024. As farmers, you know that the next harvest, the harvest after that, and the harvest after that must also produce a yield. Be more far-sighted than the EPP and its blockade attitude.

EUROPE.TABLE EDITORS

Till
Hoppe

Charlotte
Wirth

Falk
Steiner

Timo
Landenberger

Corinna
Visser

Lukas
Knigge

Eric
Bonse

Sarah
Schaefer

Manuel
Berkel

Lisa-Martina
Klein

Markus
Grabitz

Stephan
Israel

Claire
Stam

Dear reader,

May 9 as a day of remembrance has a checkered history in Ukraine; in the future, Europe Day will also be celebrated there on this historic date. Ursula von der Leyen is expected in Kyiv today to mark the occasion. According to a spokesperson, the EU Commission President intends to meet President Volodymyr Zelenskiy in the Ukrainian capital and reaffirm the EU’s full support for Ukraine in its defensive struggle against Russia.

Chancellor Olaf Scholz is traveling to Strasbourg today – he is using Europe Day to deliver a keynote speech to the European Parliament on the current situation and future of the European Union.

With pesticide regulations and renaturation legislation, the EU Commission wants to ensure the resilience of the food supply in Europe. But resistance is growing in the EU Parliament, with more and more voices calling on the Commission to withdraw the proposals. Skepticism is also high among member states. Some countries are calling for changes that harbor great potential for conflict. Lukas Scheid summarizes the state of the debate.

The EPP is also avowedly no friend of nature conservation laws. EPP leader Manfred Weber announced last week, among other things, that the party family would speak out in favor of a moratorium on “many legislative proposals” of the Commission. The SPD MEP Maria Noichl sharply criticizes this position: In her position, she accuses the EPP of putting the brakes on numerous progress issues. The EPP is acting anti-European, anti-science and is catching votes from the right-wing fringe, Noichl writes.

If you enjoy reading Europe.Table, please feel free to forward this briefing. If this mail was sent to you: Here you can test our briefing for free.

Your
Sarah Schaefer

EU nature conservation package: potential for conflict in the Council

By

Lukas Knigge

Opposition is growing in the EU Parliament to the two legislative proposals on pesticide reduction (Sustainable Use Regulation, SUR) and the renaturation of damaged ecosystems. More and more voices are rejecting the proposals outright and calling on the Commission to withdraw them.

Skepticism is also high among member states. Some countries argue that bans on pesticide use on certain agricultural land would slow down food production. The renaturation law, they criticize, promotes competition for scarce land and hinders the energy transition.

However, unlike in Parliament, calls for a complete halt to the legislative projects have not yet been heard loudly in the Council. They merely want to wait for additional data on the Commission’s impact assessment before negotiating further.

Member states call for more flexibility

Nevertheless, there are demands for adjustments to the legal texts, which harbor a great deal of potential for conflict. In various country constellations, member states want, among other things:

more flexibility in the prohibition of deterioration in the Renaturation Act;
more flexibility in peatland protection and rewetting to address local conditions;
the lifting of the ban on pesticide use in all “environmentally sensitive areas” – these include sites protected under the Water Framework Directive, Natura 2000 sites and sites notified by member states to the European Register of Nationally Protected Areas (CDDA).

No support for pesticide ban in protected areas

In any case, it is considered unlikely that pesticide use will be completely banned in protected areas. Both the Council and the Parliament agree that a general ban would hinder food production. Commission President Ursula von der Leyen has backed the idea.

The Federal Ministry of Agriculture (BMEL) is therefore also calling for improvements, including in the definition of sensitive areas. Germany has classified a particularly large number of agricultural areas as national protected areas and therefore hopes to escape a comprehensive ban on use for its farmers by redefining them. A compromise could be to allow only organic plant protection products in these protected areas.

States fear lengthy permitting process

The situation is more controversial with regard to the prohibition of deterioration of existing ecosystems. The Renaturation Act stipulates that the condition of habitats and the species that are to be protected by the regulation or are already under protection may not deteriorate. However, cases where “projects of overriding public interest” are planned for which there are no less harmful alternative solutions and the state takes compensatory measures are exempt. However, these must be reviewed and approved by the Commission.

This flexibility is not enough for some member states, who also predict a lengthy approval process. They are therefore insisting on adjustments. In the view of the Netherlands, the ban on deterioration outside Natura 2000 areas overshoots the regulation’s goal of initiating restoration measures on 20 percent of the land and lake area by 2030.

Nature conservation vs. energy transition

The Dutch government fears “unacceptable consequences for society”, for example in the construction and maintenance of infrastructure, housing, and the implementation of the energy transition, according to a letter from the Dutch Ministry of Agriculture.

The Commission’s proposal for a regulation, it said, was at odds with the RePowerEU targets, which are intended to speed up the expansion of renewable energy by, among other things, cutting red tape and speeding up permitting procedures. The Netherlands is therefore in favor of only prohibiting significant deterioration and maintaining more flexibility in achieving the targets. Not each individual site should be considered, but the situation in the whole country. The same applies to the rewetting of peatlands. Here, too, the Dutch advocate more national individuality in implementation.

Outcome-based or effort-based approach?

The Federal Ministry for the Environment (BMUV), which is responsible in Germany, supports the Commission’s proposal. It does not see a conflict between RePowerEU targets and nature conservation. In addition, the legislative text represents a “good balance of effort-oriented and result-oriented obligations”, according to a spokesperson. The Netherlands apparently sees things differently.

It is true that the proposed legislation states that member states can act more flexibly in large-scale restoration efforts by grouping habitat types according to the ecosystem to which they belong. However, “quantified area-based targets for groups of habitat types” are to be set here as well.

The Netherlands therefore still considers it a purely outcome-based approach and calls for stronger wording for the effort-based features of the regulation. However, pushing this through is likely to be difficult, as there are some powerful supporters for an outcome-based approach in the Council.

Europe investments: China increasingly focusing on batteries

China’s investments in Europe are decreasing. In 2022, the volume was down 22 percent year-on-year, according to a recent study by the Mercator Institute for China Studies (Merics) and the Rhodium Group. Compared to 2016, it even declined by 83 percent.

But China’s investments in the EU and the UK have not only slowed down; they have also fundamentally changed. It is now mainly greenfield investment, targeting one industry sector in particular: The production of EV batteries. Europe has thus become an important part of the global expansion of Chinese EVs, the study’s editors write.

Factories in Hungary, Germany, France

There are many striking examples: The Chinese battery manufacturer CATL is building a factory in Hungary for €7.6 billion, Svolt in Germany for around €2 billion or Envision AESC in France for another €2 billion. Battery investments are thus the new mainstay of Chinese investments in Europe, says the Merics/Rhodium study.

The important findings of the study are:

China’s global outbound investment falls to eight-year low.
Investments in Europe (EU+UK) also continue to decline.
Greenfield investments overtake mergers and acquisitions (M&A) for the first time since 2008.
China’s investments are concentrated in Germany, France, the UK and Hungary. More than two-thirds of the money flows to these four countries.
Target industries are consumer products and the automotive sector.
A sharp rebound in Chinese investment is unlikely in 2023, despite the end of Covid measures.

Greenfield instead of takeovers

The study shows two fundamental novelties in particular: The nature of Chinese investment has changed, as has the targeted sector.

For years, Beijing concentrated mainly on classic M&A operations, i.e., Chinese corporations’ mergers and acquisitions of German and European companies. For example, the purchase of the German robotics company Kuka, founded in Augsburg in 1898, by the Chinese electronics group Midea made headlines and sparked heated discussions.

But by now, Chinese greenfield investments in Europe have overtaken such M&A activities – for the first time in 20 years. Chinese greenfield investments, for example, amounted to around €4.5 billion last year – accounting for 57 percent of total Chinese investments. One reason: China’s companies are becoming increasingly competitive, as most recently CATL with a new battery technology.

China’s focus on EVs

This is followed by the second change: China’s greenfield investments in 2022 focused mainly on battery factories for electric cars. “Chinese firms are ploughing billions into the electric vehicle supply chain in Europe,” says Agatha Kratz, President of the US think tank Rhodium Group.

Max Zenglein sees this as an indicator of a global shift. “The changing investment patterns underline the competitiveness of Chinese companies, particularly in electric vehicles”, says the Merics chief economic expert.

This development holds dramatic news for the German car industry: BMW, VW and Co. are not only about to lose the huge sales market in China. Instead, China’s corporations seem ready to bring competition to Europe’s automotive sector.

Threat of dependence

Furthermore, China’s shifting direct investments also have effects that reach far beyond the direct regions and industries: They are not only important sources of income for the respective regions, creating numerous new jobs. More importantly, China’s corporations are also increasingly given a strategically important role on the continent. “They have become major players in Europe’s green transition“, explains Rhodium President Kratz.

This conclusion should give strategists in Europe who strive for more autonomy food for thought. Europe is also at risk of becoming dependent on China in the energy transition. This can work out well if both sides pursue a common goal. However, there are also cautionary examples, as a look at the fate of the German solar industry or the current developments among Germany’s heat pump manufacturers show. Michael Radunski

Vestager: Sovereignty Fund to facilitate risky investments

Commission Vice-President Margrethe Vestager is in favor of using the planned European Sovereignty Fund to provide incentives for private investors. “One of the ideas I am advocating is to be modeled on the European Innovation Council“, she said at a press briefing in Berlin. She said there is a need for an instrument that facilitates risky investments and works quickly.

The Commission intends to present a proposal for the Sovereignty Fund before the summer break. Within the authority, there are still intensive discussions about how this should be designed and what functions it should fulfill. Some in the Commission wanted to use the EU pot to offset subsidies from other member states, Vestager said. She has other ideas.

European unicorns

The European Innovation Council (EIC) has a manageable budget of around €10 billion and provides companies with equity capital. In this way, the EIC has already produced young companies with valuations in the billions – so-called unicorns.

Other support instruments, such as the Covid recovery program, were based on detailed national plans with milestones that took a long time to set up, she said. “If we could complement that with something that is much faster and where risks are assumed, then maybe we could be quite useful for some companies in Europe”, Vestager said. tho

Vestager cautious on industrial electricity prices

Competition Commissioner Margrethe Vestager has expressed caution about a push by German Minister for Economic Affairs Robert Habeck (Greens) for a discounted industrial electricity price. “You have to be very careful when you start subsidizing energy for companies that are in direct competition with other companies that don’t have the same opportunities“, Vestager told reporters in Berlin on Monday.

If energy is to be subsidized for large companies, it must be examined whether there is a disruption of competition, said the Vice-President of the EU Commission. However, too few details are known yet to be able to evaluate the proposal from the Ministry of Economics.

FDP against EU loans and national guarantees

In order to rule out distortions of competition in the EU internal market, Habeck had also brought a credit-financed European bridge electricity price into play. However, this was met with resistance from the coalition partner FDP yesterday. Last Friday, the BMWK proposed providing financially weak EU states with loans similar to the SURE short-time working program, backed by guarantees from the member states, so that they could temporarily subsidize electricity prices for their industries.

“A program like SURE was intended for absolute emergencies. We cannot and must not use such instruments in an inflationary manner“, said Michael Link, European policy spokesman for the FDP in the Bundestag yesterday. Link also reiterated the Free Democrats’ general rejection of a subsidized electricity price for German industrial companies: “I think Habeck’s proposal is wrong in terms of regulatory policy”. ber

Commission to present retail investor strategy shortly

The European Commission plans to present its new regulatory framework for retail investment at the end of May. The aim of the move is to achieve greater consistency in consumer protection provisions in European financial market regulation and to make capital market access easier and more attractive for retail investors.

In the legislative proposal, which is available to Table.Media, the Commission writes that investors should be able to make“informed investment decisions that meet their needs and objectives and are adequately protected in the single market by a coherent regulatory framework”, which it says will “enhance confidence and in this way bring citizens closer to capital markets and improve the participation of retail investors”. Brussels plans to present the new rules on May 24.

General ban on commissions to be dropped

After the debate on the retail investor strategy was overshadowed in recent weeks primarily by the dispute over a commission ban in investment advice, the EU authority is refraining from a general ban. However, commissions for pure execution transactions are to be prohibited in the future. In addition, the Commission wants to use new regulations to ensure that an advisor actually acts in the interest of the customer in the future.

In this context, the Commission refers to a recent Eurobarometer survey, according to which only 38 percent of consumers are convinced that the investment advice they receive from financial intermediaries is primarily in their best interest. This lack of trust is one of the key reasons leading to lower participation by retail investors, he said. The potential of the capital markets for this group of investors is thus not being exploited, the authority writes.

The economic policy spokesman for the EPP Group, Markus Ferber (CSU) spoke of a “balanced proposal” by the Commission in connection with commission-based advice. In the case of pure execution transactions, there is no good justification for commissions, Ferber said. However, a complete ban would only have led to many customers being excluded from financial advice. cr

Ukraine war: Beijing warns EU against sanctions

China has warned the European Union against sanctions against companies from the People’s Republic in connection with the Russian war against Ukraine. If such a step were to be taken, bilateral relations would deteriorate, the Chinese Foreign Ministry said on Monday. China will then take decisive measures to protect its interests, it said.

The EU Commission wants to launch the first sanctions against Chinese companies for supporting Russia’s war of aggression against Ukraine. Accordingly, the assets of seven Chinese companies in the EU are to be frozen, as several EU diplomats confirmed on Monday.

Proposal also targets Turkey

However, such a step must be decided unanimously by the 27 member states, which will discuss the proposal for the first time on Wednesday. In addition to China, the proposal also targets Turkey, the United Arab Emirates and countries in Central Asia and the Caucasus region.

With the Chinese companies, an extraterritorial component would now be added to the EU sanctions for the first time. In concrete terms, according to EU circles, it is planned to first create the legal possibility to restrict exports to third countries due to a suspected circumvention of sanctions as a deterrent. If this is not sufficient, certain exports could then actually be prevented in a second step. ari/rtr

Scholz invites Macron to Potsdam

German Chancellor Olaf Scholz will receive French President Emmanuel Macron in Potsdam on June 6. A joint dinner is planned, said government spokesman Steffen Hebestreit. According to the Élysée Palace, the meeting will discuss upcoming summits, in particular the Nouveau Pacte financier mondial in Paris on June 22-23, the European Council on June 29-30 and the NATO summit on July 11.

As previously reported, Macron will also travel to Germany from July 2-4 for an official state visit, visiting several regions. He is taking up an invitation from German President Frank-Walter Steinmeier to mark the 60th anniversary of the Élysée Treaty.

First, however, Macron will receive German Foreign Minister Annalena Baerbock in Paris on Wednesday. The Green politician will also attend a meeting of the French cabinet, the Élysée Palace announced. tho

Nature conservation in Europe – the dangerous blockade of the EPP

By Maria Noichl

The EPP group, which includes the CDU and CSU in the EU Parliament, is blocking a current proposal on the sustainable use of pesticides. The chosen reduction targets are simply not feasible, they claim. Likewise, they reject the proposed law on nature recovery, according to a resolution of the group.

EPP leader Manfred Weber has also announced that the EPP will call for a moratorium against many of the EU Commission’s legislative proposals, so that no new laws are passed at all for one or two years.

As S&D negotiator for the reform of the EU agricultural policy, I am now reading in black and white what has already been felt in Parliament for months. Manfred Weber and Co. are putting the brakes on numerous progress topics. Sham cooperation and watering-down actions in the Agriculture Committee are now turning into open blockade. All this supposedly in the name of food security and the farmers in Europe.

No agriculture without pollinators

You only have to be able to count to five to be able to classify this action of the EPP in the European Parliament:

1. Perpetrator-victim reversal

Who protects whom? The goal of the EU Commission’s current initiatives is to preserve farming opportunities in the long term. Without pollinators, for example, there is no agriculture. But Manfred Weber and the EPP want to protect farmers from bee protection laws.

However, in order to enable fertile agriculture in the long term and to provide farmers with a fair income, the EU must protect bees. The S&D Group is committed to the protection of bees. Why is the EPP not working together on this? Climate change is the threat, the loss of species is bringing farmers to their knees – not Brussels with the urgently needed pesticide savings and laws for renaturation.

2. Refusal to work

The announcement that no new laws will be passed for one or two years is in fact a refusal to work. It is our task as European politicians to take responsibility and provide answers to current challenges.

Disputes with professional groups need commitment. With truck drivers, when it comes to mandatory breaks, with entrepreneurs, when it comes to data protection of employees, and also with farmers, who are worried about the future. This work must not be too difficult even for the EPP. The proposal of the EPP: “Brussels lets the farmers work now!”, is cynical and dangerous.

European solutions in agricultural policy

3. Anti-European behavior

The EPP, as the largest party family in Europe, wants to leave the solutions to the member states in times of crisis in agriculture. While in the financial crisis, the refugee crisis and the war in Ukraine, European solutions were always longed for, the EPP is now abandoning the farmers. The European project is weakened with such a refusal attitude of Manfred Weber. The fully communalized agricultural policy requires common solutions and the further expansion of European legislation for food cultivation.

4. Anti-science behavior

The basis for this un-European action is still doubting the urgency of the legislations. The European Parliament had declared a climate emergency in November 2019. Scientifically proven many times are the dangerous decline of pollinators such as bees, especially on agricultural land, and the need for renaturation.

If the EPP understood and accepted the scientific basis of the emergency, a call to sit tight for two years would be unthinkable. The inference is clear: The EPP denies the urgency and the scientific evidence that is the basis of our legislation.

5. Manfred Weber catching votes of anti-Europeans and climate change deniers

The sad core: The EPP, Manfred Weber and Co., are not concerned about agriculture, bees or water. It’s all about votes from the right and far-right fringes in the EU.

Challenges cannot be sat out

A few words to the many farmers in the European Union: Climate change, the extreme loss of species, the loss of soil fertility and the lack of water in Europe is a concrete, major threat to our agriculture. It is the task of the legislators to identify this and to take countermeasures, even sometimes strenuous ones. It is our duty to accompany farmers through these difficult times and to initiate a transformation process in which even small and medium-sized farms do not lose out.

When political party families like the EPP promise that they can sit out these challenges – don’t believe them. For the EPP, the harvest date is election day in the summer of 2024. As farmers, you know that the next harvest, the harvest after that, and the harvest after that must also produce a yield. Be more far-sighted than the EPP and its blockade attitude.