Beyond Investment Screening: Expanding Europe’s toolbox to address economic risks from Chinese state capitalism

The European Union (EU) and China have entered a new stage in their relationship. China now appears as a “systemic competitor” or even “systemic rival” in assessments by major European business federations and EU institutions, and the EU Commission has launched a work program to assess ways to deal with the country’s economic impact on the EU. There is a growing belief across Europe that the balance of challenges and opportunities China presents has shifted, and that Europe’s policy instruments need to be adapted to this new reality. Trade competition implications can be grappled with using trade policy tools, though with limited efficiency. National security consequences of direct investment have been tagged for stepped-up screening at the border. But this leaves much unaddressed.

The new report by the Rhodium Group and Mercator Institute for China Studies takes stock of defensive measures in competition, anti-subsidy, public procurement and related policy fields that could help Europe deal with market distortions spilling over through growing Chinese investment and other commercial linkages with Europe.

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