BEIJING, August 22 (TMTPost)— Europe’s biggest economy may follow suit after the United States took further steps of tech curbs on China.

Credit：Visual China

The German cabinet, led by Economy Minister Robert Habeck, is working to draft an investment screening act to expand the conditions under which the government can prohibit the participation of non-European Union investors in German companies, the local business newspaper Handelsblatt reported, citing a government document. The proposed measures are set to target the existing critical sectors of artificial intelligence (AI), cloud computing, cybersecurity and raw materials, and the upcoming act could lower ownership thresholds under which government can intervene, according to the report.  

Berlin’s possible move came after U.S. President Joe Biden finalized his long-working new restrictions on investments in cutting-edge technologies to curb China. An executive order Biden signed earlier this month imposed new restrictions on American investments in so-called sensitive technologies, citing national security threats.

Biden ordered to issue regulations to prohibit United States persons from engaging, directly or indirectly, in transactions that are determined by heads of relevant agencies as those posing a particularly acute national security threat, and regulations which could prohibit Americans from knowingly directing prohibited transactions. The Secretary of the Treasury may require, following new regulations, prohibit and prevent any transaction by a foreign entity controlled by United States person who engages in prohibited transaction.

The order defines covered national security technologies and products as semiconductors and microelectronics, quantum information technologies, and AI sectors that are critical for the military, intelligence, surveillance, or cyber-enabled capabilities. And the entity means a partnership, association, trust, joint venture, corporation, group, subgroup, or other organization; which suggests the order effectively targets investments by U.S. private equity (PE) and venture capital firms as well as joint ventures in semiconductor, quantum computing, AI and other key strategic technologies, in which China is ratcheting up efforts to drive the development.

In its first comprehensive China strategy unveiled last month, the German government suggested its shift in approach as the resulting of a changing China. In the strategy, Germany vowed to ensure economic cooperation with China “becomes fairer, more sustainable and more reciprocal.” It admitted China is an indispensable partner for global challenges like climate change and pandemics, while cautioned China's actions have led to growing international rivalry and competition.

German Chancellor OIaf Scholz clarified later clarified the strategy doesn’t aim to decouple from China, but “to reduce critical dependencies in future”. “With China Strategy, we are reacting to a China that has changed and become more assertive,” Scholz tweeted, adding “China is and will remain a partner, competitor and systemic rival.”

China believes the strategy is counterproductive to compete and practice protectionism in the name of “de-risking” and “reducing dependence”, and to overstretch the concept of security and politicize normal cooperation, Chinese Foreign Ministry spokesperson Wang Wenbin commented. Wang warned that such moves will only generate risks and only exacerbate the division of the world, because drawing a line according to values and ideologies and advocating so-called competition of systems, interests and values goes against the trend of the time.Wang urged Germany to view China’s development in an all-round and objective way, adopt a rational and practical China policy, and work with China to respond to global challenges and contribute more certainty and positive energy to world peace and development. 

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