Germany Seeks Stricter Foreign Investment Regulations Amid China’s ‘De-risking’ Efforts

BERLIN (Reuters) – German Economy Minister Robert Habeck is proposing a new law aimed at tightening the review process for foreign investments to bolster economic security, as detailed in a ministry document obtained by Reuters on Sunday.

This initiative comes amid Berlin’s call for companies to lessen their reliance on China and assess whether existing regulations adequately support this goal.

The move also aligns with a broader Western strategy known as "de-risking," which seeks to diminish strategic dependence on China due to concerns over its increasing assertiveness in the Indo-Pacific and potential disruptions to supply chains.

Germany has sometimes been viewed as a weaker element in the Western stance towards China, given its strong economic ties with the country. For example, an attempt by China’s Cosco to acquire a stake in a goods terminal at Hamburg, the nation’s largest port, was ultimately permitted by the German government.

According to the document, "Investment reviews have gained enormously in importance in Germany, Europe and internationally in recent years."

As part of the proposed law, investments would be scrutinized when an investor gains access to a domestic company’s goods or technologies through contractual arrangements, rather than simply acquiring voting shares, which already undergo significant regulatory oversight.

Additionally, the ministry is contemplating evaluations of the security implications of new factories established in Germany by foreign entities, as well as reviews of security-sensitive research collaborations.