EU foreign investment disunity could fuel populism

Significance

For Germany and France, an important component of this is the treatment of foreign direct investment (FDI). However, prospects for an EU-wide response appear to divide the bloc, with many countries rejecting the principle of regulation by the European Commission.

Impacts

• A Commission proposal on investment scrutiny will test the limits of Chinese influence and EU unity.
• If any move on investment scrutiny is seen as singling out China, it could undermine the country’s economic relationship with the EU.
• This could stall progress on a bilateral investment treaty and any free trade agreement that might follow.
• Successful resolution of EU-Chinese tensions could open up a more coherent and reciprocal approach to FDI scrutiny and control.