For a long time, Germany has been criticized for its hesitant actions, but now the German government seems to be taking its foot off the brakes on the most debated issues of the past weeks. In just a few days, Germany could be completely independent of Russian oil; an embargo is now “manageable”, announced Economic Affairs Minister Robert Habeck yesterday in Warsaw.
Germany also changed its mind on the supply of heavy weapons. Yesterday, Defense Minister Christine Lambrecht announced not only the delivery of Gepard anti-aircraft tanks but also the training of Ukrainian soldiers on German soil. Eric Bonse analyzes why the debate about German arms deliveries is likely to continue.
On Tuesday, the Russian supplier Gazprom briefly halted gas deliveries because Poland has so far failed to meet Russian demands for payment of its gas bill in rubles. Although gas was flowing again to Poland via the Yamal pipeline yesterday evening, deliveries are to be stopped completely as of this morning. Bulgaria has also announced that it will no longer receive gas deliveries from Gazprom as of today.
What plans does Elon Musk have for Twitter? The eccentric entrepreneur is known for questioning rules. However, in Germany and the EU, there is agreement that even the richest man in the world must play by the rules for platforms in the DSA. Falk Steiner asked around in Berlin and Brussels.
“We are a reliable partner at Ukraine’s side – together with our allies,” said Defense Minister Christine Lambrecht (SPD). At the same time, she confirmed the delivery of tanks to the war zone, which had been hotly disputed until recently. The delivery of the Gepard anti-aircraft tank is a “very important contribution” to securing the airspace over Ukraine, Lambrecht said after a meeting with more than 40 countries which the USA had invited to its Ramstein airbase.
“We are not going it alone,” Lambrecht said in response to a question about German hesitancy. Everything is coordinated with Ukraine and partners, as the ring exchange of heavy weapons shows. Especially in drones and air defense, Germany serves the needs. However, it is unclear whether the criticism will now fall silent. US Defense Secretary Lloyd Austin renewed pressure on the allies and promised that “heaven and earth” would be moved to ensure that Kyiv received what it needed for its defense.
Earlier, Ukrainian President Volodymyr Zelenskiy said that his government aims to recapture all the territories occupied by Russia since 2014. “If we have enough weapons, we will start immediately.” So the need for war materiel is not likely to diminish. Lambrecht is bracing for a long conflict. The Ramstein conference was the “starting shot” for long-term support. “The best security guarantee for Ukraine is well-trained and well-equipped armed forces.”
Against this backdrop, the debate about German arms deliveries is likely to continue. However, it is being conducted differently in Berlin than in Brussels. In the EU and in NATO, Germany is by no means as harshly attacked as in the overheated domestic political discussion. For example, NATO Secretary General Jens Stoltenberg repeatedly praises Germany’s contribution to supporting Ukraine. Criticism was not heard from the Norwegian, who was the first to abandon the distinction between “light, defensive” and heavy weapons.
High Representative of the Union for Foreign Affairs Josep Borrell, known for his gruff remarks, is also holding back on criticism. In response to a question about Germany’s slow reaction, he said that the decision to supply weapons in the EU had been made at record speed. Loud grumbling can only be heard in the European Parliament. There, Green foreign policy expert Reinhard Bütikofer calls for a U-turn by the SPD in its Russia policy; Chancellor Scholz must issue a bold “nostra culpa”. French MEP Raphaël Glucksmann even sees Germany’s leadership role in the EU at risk.
Scholz’s position on the arms delivery shows that the “change we all hoped for has not occurred”, reports Die Welt. The son of the late star philosopher André Glucksmann concludes: “This war puts an end to German leadership in Europe.”
In the Council of Ministers, however, this assessment is not shared. Germany has played an active and constructive role in all decisions on Ukraine, says an EU diplomat. Only Poland and the Baltic states had voiced criticism but had not prevailed. However, the Council only decides on sanctions, not weapons – that is the responsibility of the states. The EU is also still releasing funds from the Peace Facility, established in 2016, to be used for additional war equipment. Germany also contributes to this – most recently with a grant of €400 million.
Meanwhile, Russia warns against further arms deliveries. They could lead to nuclear war, Foreign Minister Sergei Lavrov said. “The danger is serious, real, and we must not underestimate it.” In response, the US accused Russia of irresponsible escalation. Lambrecht said further care must be taken to ensure that NATO and Germany do not become belligerents. “That would have devastating consequences.” The number of weapons supplied was not the only decisive factor but Germany does not want to rush ahead either.
Somehow horrified, that’s how many prominent Twitter users and also politicians are expressing themselves right now about the takeover of the platform, which is mainly successful in multiplier circles in Germany. After all, the eccentric entrepreneur is known for wanting to push through his own ideas. And he has already outlined them for Twitter several times: He thought it was wrong for Donald Trump to be banned from the platform. Twitter was not doing enough for freedom of expression. And that Twitter, as a global platform, should be a kind of democratic agora.
However, Musk’s perspective is anything but global. His perspectives are significantly shaped by US debates, especially the US perspective on the famous “First Amendment”, which massively protects freedom of expression and, in conjunction with the broad disclaimer of the so-called Section 230 of the Communications Decency Act, grants very extensive possibilities on online platforms.
Twitter has recently been under regulatory pressure in many other regions of the world. Not only is the platform blocked by order of the authorities in countries like Iran, Russia, and China, Twitter is also subject to much stricter legislation in Europe, such as the Network Enforcement Act in Germany. And with the Digital Services Act just unified in trilogue, Europe-wide obligations are coming to the platform. “Some of these rules go in the direction that Elon Musk apparently also wants to take, others rather not, open questions remain in both cases,” says Julian Jaursch of the German think tank Stiftung Neue Verantwortung. For example, the disclosure of algorithms is an example of the former. “Basically, this goes in the direction that the EU also prefers: more transparency, more verifiability from the outside.”
But the DSA is counting on algorithmic recommendation systems being explained and profile-free use. “That’s not the same as posting the source code on Github,” Jaursch says. Musk’s interpretation of freedom of expression also needs clarification. Musk likes to portray himself as an advocate of radical freedom of expression – but will the billionaire Twitter owner actually make his personal view corporate policy?
Twitter co-founder Jack Dorsey has long been convinced by Musk. The IPO was a mistake, Dorsey now writes, on Twitter of course, because it involved the mistake of entering into financing via online advertising. In principle, no one should own or operate Twitter; it should actually be a public good at the protocol level, Dorsey said. “Solving the problem that it’s nonetheless a company, Elon is the singular solution for that that I trust.”
But Dorsey’s hopes may be premature. Musk’s wealth lies primarily in his own company shares, and the world’s richest man, on paper, will have to take on – and service – debt for the Twitter purchase. The purchase price is said to be €44 billion, while Twitter recently generated annual sales of €5 billion and thus losses.
“Even €44 billion do not exempt Elon Musk from complying with European law,” says Tiemo Wölken (SPD/S&D). “Mr. Musk will have to play by our new rules of the game for platforms in the DSA.” That includes rights for users, transparency obligations, but also how to deal with illegal content. Wölken has strong doubts about Musk’s actual motivation: “Anyone who also blocks critics and has trade unionists persecuted, I don’t buy the label as a defender of fundamental rights and freedom of expression.”
“Twitter is relevant to democracy and must not mutate into a mouthpiece for Elon Musk, his companies, or for disinformation campaigns,” says Tabea Rößner, Greens and Chair of the Digital Committee in the German Bundestag. Not only Digital Markets Act and Digital Services Act are relevant for the company, but also data protection rules. “Plans to ‘authenticate’ people raise eyebrows: It’s well known that a large number of people rely precisely on anonymous and pseudonymous communication.” Musk had announced plans to conduct an audit of accounts to determine whether they were real people.
“Something is going very wrong in our society when Elon Musk, one of the most economically powerful people in the world, is able to buy up one of the largest social media companies and claims to be the savior of freedom of expression,” says MEP Martin Schirdewan (Left Party). Freedom of expression must not be allowed to become the plaything of one of the richest men in the world.
EU Commissioner for Internal Market Thierry Breton also made it clear that Twitter would have to abide by European rules: “If it doesn’t abide by the rules, there are sanctions – six percent of revenue and, if they continue, a ban from operating in the market in the EU,” Breton told the Financial Times. If Twitter wants to operate in Europe, it must comply with the rules, including moderation, open algorithms, freedom of expression, transparency in its own rules, and meet EU commitments on hate speech, revenge porn, and harassment.
Alexandra Geese, who helped negotiate the DSA for the Green Group in the European Parliament, has a similarly sharp tone: “If Elon Musk follows through on his announcements, on the European market, Twitter can pack up and go home.” His idea of freedom of expression without moderation of content excludes a large part of the population, as women, people of color, and many others would no longer express themselves freely in such an environment. For platforms like Twitter, the DSA would mean, among other things, more human moderators, clear reporting procedures, and mandatory analysis of social risks posed by the service, Geese said.
However, Twitter has not been a company free from all influences so far either. A notable share of Twitter belonged to Saudi Arabian state investor KHC. Musk sharply countered the latter’s rejection of Prince Al Waleed bin Talal Al Saud’s initial offer by asking, “What’s the kingdom’s view on press freedom?” Musk did not receive an answer – at least not publicly.
However, the fact that Musk’s ideas are moving outside the European legal framework is far from a foregone conclusion. Musk is famous for both talking big and making big plans – and questioning rules. But neither Tesla nor SpaceX has challenged any significant traffic or aviation rules. Instead, the imagination that Tesla has also used to get policymakers excited about automated and autonomous driving has led to minor changes to sets of rules that were long overdue. What Musk actually intends to do with the platform remains to be seen – after the road and space, the entrepreneur, who is also surrounded by German politicians, now has at least one more project about whose success many people have doubts. Musk will want to prove to them that he can do that, too.
China’s shopping spree in other countries seems to be history for the time being. Spending on corporate acquisitions fell to its lowest level in 14 years, according to a new study by Rhodium Group and Mercator Institute for China Studies (Merics). “Compared with the peak periods around 2016, Chinese investment has settled at a low level,” Max Zenglein, chief economist at Merics, said on Tuesday during the presentation of the study.
He does not expect Chinese investment to increase significantly in the foreseeable future in the “current difficult economic and regulatory environment”. Strict “zero covid” policies with massively restricted contact with foreign countries, Beijing’s tight control of outbound capital, and geopolitical tensions have led to a mere three percent increase in global foreign direct investment (FDI) last year. At €96 billion, this was almost on a par with the first pandemic year of 2020. Merger and acquisition (M&A) activity even fell to its lowest level in 14 years, with a total volume of €20 billion.
In addition to the Netherlands, Germany, the UK and France were the most popular destinations for FDI from the People’s Republic, according to the study. The acquisition of Philips’ home appliances business for €3.7 billion by private equity firm Hillhouse Capital made the Netherlands the largest single recipient of Chinese investment in 2021. The deal represented around 35 percent of the total amount of all investments in 2021, according to the study, with Germany, France and the UK together accounting for a further 39 percent of investments from China.
According to the study, one non-EU country in particular experienced a major increase: the United Kingdom. There, FDI from China rose from €1.4 billion in 2020 to €2.1 billion last year. In contrast, however, there was a decline in France and Germany. In Germany, FDI fell from €2 billion euros to €1.5 billion – the lowest figure since 2015. The French received €509 million in Chinese FDI, compared with €872 million in 2020.
“The nature of Chinese investment in Europe has fundamentally changed in recent years,” explains Rhodium Group director Agatha Kratz. “The era of billion-dollar acquisitions in strategic sectors is probably over.” Chinese companies were building factories in Europe themselves instead. Chinese venture capital was also increasingly flowing into European tech start-ups, according to the study. At €1.2 billion, the investment volume in this sector was more than twice as high as in the previous year. E-commerce applications, fintech, game developers, AI and robotics companies in Germany and the UK were particularly popular with Chinese investors.
However, according to the study, the situation last year was lukewarm in areas where the financial commitment of Chinese players is supposed to have increased: In Eastern Europe, FDI declined after a strong run in 2020, coming in at €385 million. In Northern Europe, the FDI flow remained stable at €1.2 billion. Here, Chinese investors show particularly interest in Finland.
However, Chinese state-owned enterprises in particular appear to be becoming more cautious about investing abroad. FDI by state actors fell to a 20-year low in Europe, according to the study. At €1.3 billion, it accounted for 12 percent of total investment, the lowest level since 2001, according to researchers from Merics and Rhodium Group. Chinese state-owned enterprises were particularly active in southern Europe. There, Chinese state-owned enterprises made a major investment of around €600 million in the Spanish energy sector. There, the energy company China Three Gorges bought renewable energy plants.
The authors of the study see several reasons for the development of Chinese FDI in Europe: Beijing’s rigid “zero covid” policy, which makes contacts with foreign countries difficult, as well as the strict control of outgoing capital and the crackdown on domestic tech companies.
But there is also activity on the EU side that discourage investors from the People’s Republic. In several EU states, screening for FDI is currently being reviewed and renewed. Additional new legislation from Brussels could affect market access for Chinese companies in the future and thus reduce their desire to invest, the study states.
Among them are the EU Supply Chain Act and two new drafts that passed an important legal hurdle earlier this week: The European Parliament Committee on International Trade voted on Monday on its position on a new law on foreign subsidies and on the trialogue agreement on the new International Procurement Instrument (IPI). Both will now be voted on in the EU Parliament in the near future.
Especially the law on foreign subsidies could dampen the investment enthusiasm of Chinese companies in the EU. This is because the draft law envisages that all companies operating in the European Union will have to disclose subsidies from non-EU countries – which will have a significant deterrent effect on some investors from the People’s Republic.
Christian Petry sits in front of the well-stocked bookshelf in his Berlin office during the video interview earlier this year. He sees a wintry Spree River flowing through the government district from the window. It is his third legislative term in Berlin.
The 56-year-old has a background in local politics and has been head of Welschbach in Saarland since 1999. “That’s a village of twelve hundred souls, so you’re the contact person for everything, from playground lawns to cemetery design.” Petry is convinced, “If I didn’t take these concerns as seriously as more abstract issues at the EU level, I’d lose my connection to politics.”
In his homeland, it becomes clear how much the two are connected, the big issues and the small ones: “Because of its history, the Saarland is still a peripheral zone today, even though it lies in the heart of Europe. It is true that there are no longer any barks. These were briefly rebuilt because of COVID, we don’t want that anymore. But transport links are abruptly severed. Police and rescue helicopters have to turn back. The French baker is not allowed to sell his baguette one street away, in Germany.”
Petry would like to see “cross-border cooperation one day just meaning cooperation. I would like, certainly in the distant future, to merge a social space without ruptures, legal spaces, without dissolving nation states.” Then there would still be differences between Lisbon and Berlin, but no longer between Saarland and Moselle. EU cooperation works well in the economy and trade, “but we need to agree on sovereignty issues“. Digitalization and sustainability must also be advanced without protectionism: “Europe should be open.”
Despite COVID, Petry (“I test myself every day, I’ve been vaccinated three times”) ventures on business trips through Europe – he was in Paris again before the presidential election in France. “Then it’s on to northern Macedonia.”
As a member of the Franco-German parliamentary assembly, where members of the Bundestag and members of the French parliament meet, Petry spoke out in favor of Emmanuel Macron’s re-election.
Even if they don’t see eye to eye politically, he prefers that to the Democrat being overtaken by the far right. “Candidates from my camp, on the other hand, seem to have no chance.”
Behind Petry is a bust of Karl Marx, below which is a photo of his “FC Bundestag” soccer team. “This is besides soccer and hobby also ambassador for democracy and pluralism,” says Petry. One looks for women on the team photo, however, in vain. It is cross-factional, but without AfD members: “Only those who identify with the club’s statutes, in which we advocate an open society, can participate.” Vera Almotlak
For a long time, Germany has been criticized for its hesitant actions, but now the German government seems to be taking its foot off the brakes on the most debated issues of the past weeks. In just a few days, Germany could be completely independent of Russian oil; an embargo is now “manageable”, announced Economic Affairs Minister Robert Habeck yesterday in Warsaw.
Germany also changed its mind on the supply of heavy weapons. Yesterday, Defense Minister Christine Lambrecht announced not only the delivery of Gepard anti-aircraft tanks but also the training of Ukrainian soldiers on German soil. Eric Bonse analyzes why the debate about German arms deliveries is likely to continue.
On Tuesday, the Russian supplier Gazprom briefly halted gas deliveries because Poland has so far failed to meet Russian demands for payment of its gas bill in rubles. Although gas was flowing again to Poland via the Yamal pipeline yesterday evening, deliveries are to be stopped completely as of this morning. Bulgaria has also announced that it will no longer receive gas deliveries from Gazprom as of today.
What plans does Elon Musk have for Twitter? The eccentric entrepreneur is known for questioning rules. However, in Germany and the EU, there is agreement that even the richest man in the world must play by the rules for platforms in the DSA. Falk Steiner asked around in Berlin and Brussels.
“We are a reliable partner at Ukraine’s side – together with our allies,” said Defense Minister Christine Lambrecht (SPD). At the same time, she confirmed the delivery of tanks to the war zone, which had been hotly disputed until recently. The delivery of the Gepard anti-aircraft tank is a “very important contribution” to securing the airspace over Ukraine, Lambrecht said after a meeting with more than 40 countries which the USA had invited to its Ramstein airbase.
“We are not going it alone,” Lambrecht said in response to a question about German hesitancy. Everything is coordinated with Ukraine and partners, as the ring exchange of heavy weapons shows. Especially in drones and air defense, Germany serves the needs. However, it is unclear whether the criticism will now fall silent. US Defense Secretary Lloyd Austin renewed pressure on the allies and promised that “heaven and earth” would be moved to ensure that Kyiv received what it needed for its defense.
Earlier, Ukrainian President Volodymyr Zelenskiy said that his government aims to recapture all the territories occupied by Russia since 2014. “If we have enough weapons, we will start immediately.” So the need for war materiel is not likely to diminish. Lambrecht is bracing for a long conflict. The Ramstein conference was the “starting shot” for long-term support. “The best security guarantee for Ukraine is well-trained and well-equipped armed forces.”
Against this backdrop, the debate about German arms deliveries is likely to continue. However, it is being conducted differently in Berlin than in Brussels. In the EU and in NATO, Germany is by no means as harshly attacked as in the overheated domestic political discussion. For example, NATO Secretary General Jens Stoltenberg repeatedly praises Germany’s contribution to supporting Ukraine. Criticism was not heard from the Norwegian, who was the first to abandon the distinction between “light, defensive” and heavy weapons.
High Representative of the Union for Foreign Affairs Josep Borrell, known for his gruff remarks, is also holding back on criticism. In response to a question about Germany’s slow reaction, he said that the decision to supply weapons in the EU had been made at record speed. Loud grumbling can only be heard in the European Parliament. There, Green foreign policy expert Reinhard Bütikofer calls for a U-turn by the SPD in its Russia policy; Chancellor Scholz must issue a bold “nostra culpa”. French MEP Raphaël Glucksmann even sees Germany’s leadership role in the EU at risk.
Scholz’s position on the arms delivery shows that the “change we all hoped for has not occurred”, reports Die Welt. The son of the late star philosopher André Glucksmann concludes: “This war puts an end to German leadership in Europe.”
In the Council of Ministers, however, this assessment is not shared. Germany has played an active and constructive role in all decisions on Ukraine, says an EU diplomat. Only Poland and the Baltic states had voiced criticism but had not prevailed. However, the Council only decides on sanctions, not weapons – that is the responsibility of the states. The EU is also still releasing funds from the Peace Facility, established in 2016, to be used for additional war equipment. Germany also contributes to this – most recently with a grant of €400 million.
Meanwhile, Russia warns against further arms deliveries. They could lead to nuclear war, Foreign Minister Sergei Lavrov said. “The danger is serious, real, and we must not underestimate it.” In response, the US accused Russia of irresponsible escalation. Lambrecht said further care must be taken to ensure that NATO and Germany do not become belligerents. “That would have devastating consequences.” The number of weapons supplied was not the only decisive factor but Germany does not want to rush ahead either.
Somehow horrified, that’s how many prominent Twitter users and also politicians are expressing themselves right now about the takeover of the platform, which is mainly successful in multiplier circles in Germany. After all, the eccentric entrepreneur is known for wanting to push through his own ideas. And he has already outlined them for Twitter several times: He thought it was wrong for Donald Trump to be banned from the platform. Twitter was not doing enough for freedom of expression. And that Twitter, as a global platform, should be a kind of democratic agora.
However, Musk’s perspective is anything but global. His perspectives are significantly shaped by US debates, especially the US perspective on the famous “First Amendment”, which massively protects freedom of expression and, in conjunction with the broad disclaimer of the so-called Section 230 of the Communications Decency Act, grants very extensive possibilities on online platforms.
Twitter has recently been under regulatory pressure in many other regions of the world. Not only is the platform blocked by order of the authorities in countries like Iran, Russia, and China, Twitter is also subject to much stricter legislation in Europe, such as the Network Enforcement Act in Germany. And with the Digital Services Act just unified in trilogue, Europe-wide obligations are coming to the platform. “Some of these rules go in the direction that Elon Musk apparently also wants to take, others rather not, open questions remain in both cases,” says Julian Jaursch of the German think tank Stiftung Neue Verantwortung. For example, the disclosure of algorithms is an example of the former. “Basically, this goes in the direction that the EU also prefers: more transparency, more verifiability from the outside.”
But the DSA is counting on algorithmic recommendation systems being explained and profile-free use. “That’s not the same as posting the source code on Github,” Jaursch says. Musk’s interpretation of freedom of expression also needs clarification. Musk likes to portray himself as an advocate of radical freedom of expression – but will the billionaire Twitter owner actually make his personal view corporate policy?
Twitter co-founder Jack Dorsey has long been convinced by Musk. The IPO was a mistake, Dorsey now writes, on Twitter of course, because it involved the mistake of entering into financing via online advertising. In principle, no one should own or operate Twitter; it should actually be a public good at the protocol level, Dorsey said. “Solving the problem that it’s nonetheless a company, Elon is the singular solution for that that I trust.”
But Dorsey’s hopes may be premature. Musk’s wealth lies primarily in his own company shares, and the world’s richest man, on paper, will have to take on – and service – debt for the Twitter purchase. The purchase price is said to be €44 billion, while Twitter recently generated annual sales of €5 billion and thus losses.
“Even €44 billion do not exempt Elon Musk from complying with European law,” says Tiemo Wölken (SPD/S&D). “Mr. Musk will have to play by our new rules of the game for platforms in the DSA.” That includes rights for users, transparency obligations, but also how to deal with illegal content. Wölken has strong doubts about Musk’s actual motivation: “Anyone who also blocks critics and has trade unionists persecuted, I don’t buy the label as a defender of fundamental rights and freedom of expression.”
“Twitter is relevant to democracy and must not mutate into a mouthpiece for Elon Musk, his companies, or for disinformation campaigns,” says Tabea Rößner, Greens and Chair of the Digital Committee in the German Bundestag. Not only Digital Markets Act and Digital Services Act are relevant for the company, but also data protection rules. “Plans to ‘authenticate’ people raise eyebrows: It’s well known that a large number of people rely precisely on anonymous and pseudonymous communication.” Musk had announced plans to conduct an audit of accounts to determine whether they were real people.
“Something is going very wrong in our society when Elon Musk, one of the most economically powerful people in the world, is able to buy up one of the largest social media companies and claims to be the savior of freedom of expression,” says MEP Martin Schirdewan (Left Party). Freedom of expression must not be allowed to become the plaything of one of the richest men in the world.
EU Commissioner for Internal Market Thierry Breton also made it clear that Twitter would have to abide by European rules: “If it doesn’t abide by the rules, there are sanctions – six percent of revenue and, if they continue, a ban from operating in the market in the EU,” Breton told the Financial Times. If Twitter wants to operate in Europe, it must comply with the rules, including moderation, open algorithms, freedom of expression, transparency in its own rules, and meet EU commitments on hate speech, revenge porn, and harassment.
Alexandra Geese, who helped negotiate the DSA for the Green Group in the European Parliament, has a similarly sharp tone: “If Elon Musk follows through on his announcements, on the European market, Twitter can pack up and go home.” His idea of freedom of expression without moderation of content excludes a large part of the population, as women, people of color, and many others would no longer express themselves freely in such an environment. For platforms like Twitter, the DSA would mean, among other things, more human moderators, clear reporting procedures, and mandatory analysis of social risks posed by the service, Geese said.
However, Twitter has not been a company free from all influences so far either. A notable share of Twitter belonged to Saudi Arabian state investor KHC. Musk sharply countered the latter’s rejection of Prince Al Waleed bin Talal Al Saud’s initial offer by asking, “What’s the kingdom’s view on press freedom?” Musk did not receive an answer – at least not publicly.
However, the fact that Musk’s ideas are moving outside the European legal framework is far from a foregone conclusion. Musk is famous for both talking big and making big plans – and questioning rules. But neither Tesla nor SpaceX has challenged any significant traffic or aviation rules. Instead, the imagination that Tesla has also used to get policymakers excited about automated and autonomous driving has led to minor changes to sets of rules that were long overdue. What Musk actually intends to do with the platform remains to be seen – after the road and space, the entrepreneur, who is also surrounded by German politicians, now has at least one more project about whose success many people have doubts. Musk will want to prove to them that he can do that, too.
China’s shopping spree in other countries seems to be history for the time being. Spending on corporate acquisitions fell to its lowest level in 14 years, according to a new study by Rhodium Group and Mercator Institute for China Studies (Merics). “Compared with the peak periods around 2016, Chinese investment has settled at a low level,” Max Zenglein, chief economist at Merics, said on Tuesday during the presentation of the study.
He does not expect Chinese investment to increase significantly in the foreseeable future in the “current difficult economic and regulatory environment”. Strict “zero covid” policies with massively restricted contact with foreign countries, Beijing’s tight control of outbound capital, and geopolitical tensions have led to a mere three percent increase in global foreign direct investment (FDI) last year. At €96 billion, this was almost on a par with the first pandemic year of 2020. Merger and acquisition (M&A) activity even fell to its lowest level in 14 years, with a total volume of €20 billion.
In addition to the Netherlands, Germany, the UK and France were the most popular destinations for FDI from the People’s Republic, according to the study. The acquisition of Philips’ home appliances business for €3.7 billion by private equity firm Hillhouse Capital made the Netherlands the largest single recipient of Chinese investment in 2021. The deal represented around 35 percent of the total amount of all investments in 2021, according to the study, with Germany, France and the UK together accounting for a further 39 percent of investments from China.
According to the study, one non-EU country in particular experienced a major increase: the United Kingdom. There, FDI from China rose from €1.4 billion in 2020 to €2.1 billion last year. In contrast, however, there was a decline in France and Germany. In Germany, FDI fell from €2 billion euros to €1.5 billion – the lowest figure since 2015. The French received €509 million in Chinese FDI, compared with €872 million in 2020.
“The nature of Chinese investment in Europe has fundamentally changed in recent years,” explains Rhodium Group director Agatha Kratz. “The era of billion-dollar acquisitions in strategic sectors is probably over.” Chinese companies were building factories in Europe themselves instead. Chinese venture capital was also increasingly flowing into European tech start-ups, according to the study. At €1.2 billion, the investment volume in this sector was more than twice as high as in the previous year. E-commerce applications, fintech, game developers, AI and robotics companies in Germany and the UK were particularly popular with Chinese investors.
However, according to the study, the situation last year was lukewarm in areas where the financial commitment of Chinese players is supposed to have increased: In Eastern Europe, FDI declined after a strong run in 2020, coming in at €385 million. In Northern Europe, the FDI flow remained stable at €1.2 billion. Here, Chinese investors show particularly interest in Finland.
However, Chinese state-owned enterprises in particular appear to be becoming more cautious about investing abroad. FDI by state actors fell to a 20-year low in Europe, according to the study. At €1.3 billion, it accounted for 12 percent of total investment, the lowest level since 2001, according to researchers from Merics and Rhodium Group. Chinese state-owned enterprises were particularly active in southern Europe. There, Chinese state-owned enterprises made a major investment of around €600 million in the Spanish energy sector. There, the energy company China Three Gorges bought renewable energy plants.
The authors of the study see several reasons for the development of Chinese FDI in Europe: Beijing’s rigid “zero covid” policy, which makes contacts with foreign countries difficult, as well as the strict control of outgoing capital and the crackdown on domestic tech companies.
But there is also activity on the EU side that discourage investors from the People’s Republic. In several EU states, screening for FDI is currently being reviewed and renewed. Additional new legislation from Brussels could affect market access for Chinese companies in the future and thus reduce their desire to invest, the study states.
Among them are the EU Supply Chain Act and two new drafts that passed an important legal hurdle earlier this week: The European Parliament Committee on International Trade voted on Monday on its position on a new law on foreign subsidies and on the trialogue agreement on the new International Procurement Instrument (IPI). Both will now be voted on in the EU Parliament in the near future.
Especially the law on foreign subsidies could dampen the investment enthusiasm of Chinese companies in the EU. This is because the draft law envisages that all companies operating in the European Union will have to disclose subsidies from non-EU countries – which will have a significant deterrent effect on some investors from the People’s Republic.
Christian Petry sits in front of the well-stocked bookshelf in his Berlin office during the video interview earlier this year. He sees a wintry Spree River flowing through the government district from the window. It is his third legislative term in Berlin.
The 56-year-old has a background in local politics and has been head of Welschbach in Saarland since 1999. “That’s a village of twelve hundred souls, so you’re the contact person for everything, from playground lawns to cemetery design.” Petry is convinced, “If I didn’t take these concerns as seriously as more abstract issues at the EU level, I’d lose my connection to politics.”
In his homeland, it becomes clear how much the two are connected, the big issues and the small ones: “Because of its history, the Saarland is still a peripheral zone today, even though it lies in the heart of Europe. It is true that there are no longer any barks. These were briefly rebuilt because of COVID, we don’t want that anymore. But transport links are abruptly severed. Police and rescue helicopters have to turn back. The French baker is not allowed to sell his baguette one street away, in Germany.”
Petry would like to see “cross-border cooperation one day just meaning cooperation. I would like, certainly in the distant future, to merge a social space without ruptures, legal spaces, without dissolving nation states.” Then there would still be differences between Lisbon and Berlin, but no longer between Saarland and Moselle. EU cooperation works well in the economy and trade, “but we need to agree on sovereignty issues“. Digitalization and sustainability must also be advanced without protectionism: “Europe should be open.”
Despite COVID, Petry (“I test myself every day, I’ve been vaccinated three times”) ventures on business trips through Europe – he was in Paris again before the presidential election in France. “Then it’s on to northern Macedonia.”
As a member of the Franco-German parliamentary assembly, where members of the Bundestag and members of the French parliament meet, Petry spoke out in favor of Emmanuel Macron’s re-election.
Even if they don’t see eye to eye politically, he prefers that to the Democrat being overtaken by the far right. “Candidates from my camp, on the other hand, seem to have no chance.”
Behind Petry is a bust of Karl Marx, below which is a photo of his “FC Bundestag” soccer team. “This is besides soccer and hobby also ambassador for democracy and pluralism,” says Petry. One looks for women on the team photo, however, in vain. It is cross-factional, but without AfD members: “Only those who identify with the club’s statutes, in which we advocate an open society, can participate.” Vera Almotlak
