EU to ringfence more high tech areas from China

The European Union will ask its members to screen foreign direct investment (FDIs) and potentially block countries such as China and Russia from getting access to their sensitive technologies in the chip, artificial intelligence (AI) and quantum computing sectors.

The EU will announce its European Economic Security Package (EESP) on Wednesday to ask all EU member states to set up screening mechanisms and widen the scope of existing rules to include investments made by companies that are either directly or indirectly controlled by foreign entities, according to a draft of the plan seen by Bloomberg.

The proposal will also suggest the creation of a fund to increase the development of technologies that can serve both military and civil purposes.

The EU has spent more than half-a-year preparing for this proposal. It comes after Chinese Premier Li Qiang met with President of the European Commission on the sidelines of the World Economic Forum Annual Meeting 2024 in Davos on January 16.

During the meeting, EC chief Ursula von der Leyen said the EU does not intend to decouple from China. Li said China is ready to import more products from the EU that align with market demand, and hopes the EU will relax export restrictions on high-technology products to China.

China’s state media said the new proposal of the EU will hit Chinese firms that are interested in acquiring Europe’s high-technology companies.

Some Chinese commentators said Beijing will open and maintain dialogue with each of the EU member states individually and persuade them to ease their investment rules. They said that, in return, China will import more goods from them.

“After Ursula von der Leyen suggested early last year that the EU de-risk from China, the EU