CHINESE INVESTMENT IN THE EUROPEAN UNION & NATIONAL SECURITY

Abstract

Rapidly increasing foreign direct investment from China within the European Union over the past decade has been, in general, greatly fostered by an open and non-discriminatory legal regime. However, 28 Member States retain control over the review of such investment for purposes of evaluating national security concerns within their respective borders. Current trends reveal a strong likelihood of substantial increases within the coming years in Chinese investment touching upon so-called “strategic” or “sensitive” sectors within the European Union nations. Similar Chinese investment in the United States has raised some strong opposition from the federal government on national security grounds. Accordingly, this article compares and contrasts the European Union’s current fragmented system of national security review with that of the United States — a centralized legal regime which provides for exclusive federal government national security review of foreign investment. The question is then posed as to the likelihood of the European Union adopting an American-style unified national security review system to replace the existing fragmented system, especially in light of the newly enhanced legal competence of European Union authorities over issues concerning foreign investment. This article then concludes with an analysis of the advantages to Chinese investors stemming from the creation of such a European-wide system of national security review.