Germany Targets China With Tighter Vetting of Foreign Investment

(Bloomberg) -- Chancellor Angela Merkel’s government is set to tighten control over foreign investment in Germany amid concern about possible Chinese influence over technology companies.

Economy Minister Peter Altmaier is proposing to lower the threshold for reviewing investments by non-European Union companies that may pose a security risk in areas such as defense and critical infrastructure, a person familiar with the discussion said. Merkel’s cabinet is expected to approve the plan on Wednesday, followed by a news conference by Altmaier.

Any bid for a stake of 10 percent or more would trigger a government review, compared to a 25 percent threshold now, the person said.

Germany has stepped up pressure for coordinated EU action since the takeover of robot maker Kuka AG by China’s Midea Group Co. in 2016. That led Merkel’s government to rethink its tools for shielding technology companies and securing German competitiveness, though it says the modified rule isn’t aimed specifically at China.

In August, Merkel’s cabinet stopped a Chinese bid for the first time by vetoing the potential purchase of machine-tool manufacturer Leifeld Metal Spinning AG.

While Germany is trying to sidestep trade conflict between the U.S. and China, its government also is under pressure to counter Chinese inroads on other fronts. That includes U.S. warnings to German policy makers against using Huawei Technologies Co. equipment to upgrade the nation’s 5G wireless network.

A U.S. delegation met on Friday with German Foreign Ministry officials in Berlin to discuss risks posed by the Chinese company, according to people with knowledge of the talks who asked not to be identified because the matter is private.

The Berlin meeting took place a day after German carrier Deutsche Telekom AG said it will re-evaluate its purchasing strategy on Huawei, an indication that it may drop the Chinese company from its list of network suppliers.

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