Evaluation of the EU Screening Mechanism and the Question of Reciprocity with China

Abstract

This paper comments on the EU’s legal framework for screening foreign direct investment. This concerns the EU Regulation related to this matter. The difficulty of determining in certain cases whether a company is controlled by a foreign government is shown using the example of Huawei. The paper argues that the current screening mechanisms should be modified so that they also take into consideration reciprocity, namely whether the country of origin of foreign direct investment equally allows access to foreign direct investment from the EU. The German screening mechanism is analysed along with the most notable cases of Chinese foreign direct investment that aroused the suspicion of the German authorities. The paper highlights the discrepancy between the legal justification for blocking foreign direct investment, in particular public policy and public security reasons, with the reality in which investments are often analysed from the government standpoint of the economic or political consequences of the investment. Keywords: screening mechanism, foreign direct investment, free movement of capital, EU law, China, Germany, Huawei, public policy, public security.   This work is licensed under the Creative Commons Attribution − Non-Commercial − No Derivatives 4.0 International License.   Suggested citation: M Kontak, ‘Evaluation of the EU Screening Mechanism and the Question of Reciprocity with China’ (2021) 17 CYELP 203.