Manfred Weber: Ban Chinese buy-outs of EU firms during pandemic

The European People’s Party chief said Chinese investors are trying to buy undervalued EU companies hit by the crisis.

Brussels should ban Chinese investors from snapping up EU companies that are vulnerable to cheap buy-outs due to the economic fallout from the coronavirus crisis, said Manfred Weber, head of the European People’s Party group in the European Parliament.

The leader of the center-right grouping who is close to German Chancellor Angela Merkel, told Germany’s Welt am Sonntag newspaper that the EU should prevent a “Chinese shopping tour” for 12 months while the crisis is most acute.

“We have to see that Chinese companies, partly with the support of state funds, are increasingly trying to buy up European companies that are cheap to acquire or that got into economic difficulties due to the coronavirus crisis,” the German MEP said. “We have to protect ourselves.”

His comments come as the European Commission is drawing up plans to create a fund that could take equity stakes in companies that are of strategic importance to the bloc.

The Brussels executive has already told governments that they can inject capital and provide cash-strapped companies with subordinated debt — loans that are repaid after all over corporate debt is dealt with.

Shielding EU companies from Chinese investors is important, as Beijing becomes “the strategic competitor for Europe that represents the authoritarian model of society,” Weber said. China “wants to expand its power and replace the United States as a leading power.”

In the same interview, Weber told the newspaper that strict audits on spending by governments will be necessary when the EU’s recovery plan is up and running.

The plan will offer money to governments in financial trouble via loans and grants to kick-start troubled industries. But checks will be needed to stop indebted countries from misusing the money.

“I am making it clear that countries like Italy or Spain must not use the billion-dollar aid from the reconstruction fund … to fill their budgetary gaps or to pay out pensions,” the 47-year old said. “We need strict controls to ensure that the money is spent properly.”

The Parliament, European Court of Auditors and the Commission should carry out these checks rather than trusting national leaders he said.

“My trust in the Czech Prime Minister [Andrej] Babiš, for example, is extremely limited in this context,” he said, referring to allegations that the leader illegally obtained around €2 million in EU subsidies in 2008.

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“People in Europe will only understand the grants to EU countries-in-need if they know that the money will also be used sensibly and in a future-oriented manner,” Weber said.