The Expanding Encirclement of China: Compensation Claims and Europe’s Defense Against Chinese Acquisitions of Advanced Companies
In the wake of the Wuhan virus crisis, an encirclement of China has been expanding across Europe and America.
This article examines policy proposals calling for compensation from China, Five Eyes efforts to decouple from Chinese dependence, and European measures to protect advanced and strategic companies from Chinese capital.
June 14, 2020
A policy proposal was published stating that China’s failure to disclose sufficient information violated the “International Health Regulations,” and that the international community should demand compensation from China.
The following is the continuation of the previous chapter.
The expanding “encirclement of China.”
France, where President Xi visited in March 2019 and concluded contracts worth 40 billion euros, or about 4.6 trillion yen, also saw President Macron clearly point to the responsibility of the Chinese government in mid-April, telling the Financial Times, “Do not be so naively honest as to say that China is handling this, that is, the virus outbreak, well.”
German Chancellor Merkel, who had been cautious because China accounts for about 40 percent of Volkswagen’s global sales, also expressed dissatisfaction over transparency.
At a press conference on April 20, she said, “If China had disclosed more information about the source of the virus, it would have led to better results for everyone in the world to learn from.”
In mid-April, when Germany’s largest newspaper, Bild, published an editorial saying that China should be charged a total of 165 billion dollars in compensation, Chinese government officials posted a rebuttal, and the newspaper responded again, resulting in an unusual war of words.
China and Russia had carried out operations to drive a wedge between Europe and America over matters such as Brexit, but in the coronavirus crisis, major European countries such as Britain, France, and Germany have joined the hardline stance of the United States in questioning China’s responsibility.
With Australia, which is calling for an “independent investigation,” also joining in, an “encirclement of China” is spreading across Europe, America, and Australia.
In April, the British government-affiliated think tank, the Henry Jackson Society, published a policy proposal stating that the Chinese government’s failure to disclose sufficient information to the World Health Organization, or WHO, violated the “International Health Regulations,” and that the international community should demand compensation from China.
It estimated Britain’s losses at 350 billion pounds, or about 47.44 trillion yen, and the losses of the Group of Seven advanced countries at at least 3.2 trillion pounds, or about 430 trillion yen.
Furthermore, in May, it pointed out that Britain depends on imports from China for 71 high-value-added and strategically important products, including pharmaceuticals and high-tech goods.
It proposed that Britain should work with the Five Eyes, the five Anglo-Saxon countries including the United States and Canada that share classified information, to eliminate dependence on China through decoupling, or separation, in trade with China.
It stated that the five countries should bring 319 products back from China to their own countries.
However, while Europe was struggling to contain the pandemic, it found that Chinese companies had begun launching an acquisition offensive against advanced companies.
This was because the stock prices of European companies had fallen due to the coronavirus crisis.
European countries moved to defend themselves.
According to the British newspaper Daily Express, MI6 and MI5 argued that, from the standpoint of national security to protect British intelligence and advanced industries, the state should tighten controls so that strategic industries are not swallowed up by Chinese capital.
In early April, the German government approved regulations that would allow it to block acquisitions by companies from outside the EU if they were deemed likely to “harm Germany’s interests.”
It also designated pharmaceuticals, energy, and digital industries as important from the standpoint of national security.
The Italian government also requires government approval when foreign companies seek to acquire 10 percent or more of shares in sectors such as banking, insurance, and energy.
Spain also introduced new rules.
When non-EU investors acquire management control of companies designated as strategic industries, or acquire more than 10 percent of their shares, they are required to obtain new approval.
This article continues.