President Donald Trump's order Wednesday blocking China-backed Bridge Capital Partners' $1.3 billion plan to acquire Lattice Semiconductor Corp. ( (LSCC - Get Report) - Get Report) on grounds of national security resounded to a rare echo from European Commission President Jean-Claude Juncker.
On both sides of the Atlantic, political leaders were taking aim at Chinese acquisitions of sensitive technology. Trump was exercising a right of veto he already holds. Juncker, in his State of the Union address to the European Parliament, was cautiously demanding the same right, which, as yet, is beyond his grasp. Juncker would love to establish a European takeover-vetting agency similar to the Committee on Foreign Investment in the United States that recommended the Lattice move to the White House.
Juncker and Trump are not obvious soul-mates; like many European Union leaders the EC president is more often primly disapproving of Trump's America First sloganeering. But China's vast appetite for European technology and know-how has created a new level of nervousness about national security and the loss of the West's technological edge and intellectual property. The political noise in Europe and the U.S. is eerily reminiscent of both Cold War era fears of Soviet espionage and the panic over jobs and IP sparked by Japan's export-led industrial resurgence of the 1970s and 1980s.
China is threatening not only because it is an export powerhouse and a voracious - - and not always law-abiding - - acquirer of IP, but also because of its rising geopolitical power and influence, which put it in increasingly antagonistic competition with America and the West. After all - occasional bursts of anti-Americanism aside - few European leaders are as vocal in condemning U.S. acquisitions of European companies, even though China accounts for a far smaller proportion of inbound investment than U.S. buyers.
Chinese Commerce Ministry spokesman Gao Feng immediately condemned Trump's order, saying that countries should not use security reviews as a way to push protectionism. But China's objections are rich, coming from a country, which in the midst of the international panic over North Korea's nuclear weapons is busy squeezing the South Korean economy hard in protest at the deployment of U.S. anti-missile weaponry it claims could compromise its own security. Even richer are its admonitions against Western protectionism even as it denies access to a wide array of Western investments.
Yet, while Juncker speaks with the backing of Germany, France and Italy, which are all equally nervous of seeing their prize technologies hijacked by state-backed Chinese buyers, he does not have the universal support of other EU member states. Britain - with its eye on what it (probably naively) hopes will be an advantageous free-trade deal with China after Brexit - has led the opposition to greater safeguards on foreign takeovers. Other free-traders, such as Sweden and the Netherlands, and Eastern European economies with a thirst for Chinese investment and few technological secrets to protect have so far lined up behind the U.K. to oppose giving the EC any kind of binding power to block deals.
But Juncker made clear in his other parts of his address in Strasbourg on Wednesday that many other elements of the European agenda - on defense co-operation and strengthening the euro for example - will be a lot easier once Britain leaves the EU in 2019. He knows that he or his successor can also bank on winning the argument on trade and protection after Brexit, as opponents will no longer have the votes to stop him.
And by then, the popular backlash against China, already stoked in Germany by raids on its national champions such as the $5.4 billion acquisition of robotic equipment maker Kuka by a Chinese buyer last year, will likely have become even more acute.
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Editors' pick: Originally published Sept. 14.