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Danielle Myles Editor, Economic Security Watch
Senior editor, fDi Intelligence May 26, 2026 |
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Hello everyone, and welcome back to Economic Security Watch.
The EU's move to tighten FDI screening has come full circle. This month the European parliament approved a years-long bid by Brussels to overhaul national security reviews to make them stricter. It came almost 10 years to the day after a blockbuster Chinese investment in Germany set in motion calls for Brussels to establish the bloc’s first set of screening rules. That deal is a major focus of today’s newsletter.
Here’s what we have:
Thank you for being part of our community, and it was great catching up with some of you in the US this month at the Celis Institute’s DC Leaders event.
We love hearing from our readers. Email me at danielle.myles@ft.com with your queries, critiques and ideas for Economic Security Watch.
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By some measures, the creation of the EU’s contemporary economic security framework started exactly one decade ago. Chinese household appliance maker Midea’s €4.5bn acquisition of Kuka in May 2016 made the German public, politicians and media take notice of new potential threats — linked to technology transfer and the erosion of its industrial base — created by inbound investment.
At the time, those advising on the deal tracked 3000 press reports dedicated to the transaction. Kuka-Midea was part of record-breaking volumes of Chinese investment into Europe in 2016. But losing an emerging national champion in a core German competency like automation — as Industry 4.0 was kicking off — was considered a threat to its future technological competitiveness. It was also a wake-up call to extend FDI screening to a broader range of sectors.
Today, the deal is still considered by many as the genesis of EU moves to tighten investment screening, and tackle other security-linked risks such as foreign subsidies and R&D moving abroad. Some label the deal as FDI’s “loss of naivety”.
But when it comes to China, much-needed debate in the bloc continues about the need to co-operate with the country given its leadership in green and other technologies. European business leaders are becoming particularly vocal. The 10-year anniversary of the deal that kicked things off seems as good a time as any to reassess the direction of EU economic security.
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“The fact that now almost every European country has an investment screening regime — that the EU mechanism exists and potentially even the Foreign Subsidies Regulation — traces directly back to Kuka-Midea” Florian Sippel, partner at Freshfields in Munich |
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When it comes to the trajectory of economic security, the significance of this deal happening in Germany is not limited to the country’s clout in pushing it up the Commission’s agenda. Berlin has deep, long-standing ties with Beijing fostered by decades of industrial supply chain integration. And the Kuka deal hasn’t led to Germany slamming the door on Chinese co-operation. Far from it. It hasn’t yet banned Huawei from its 5G networks like many other EU member states. It approved state-owned Cosco owning 25 per cent of a terminal at its biggest port, Hamburg. My thought bubble: Did this deal happening in Germany rather than an EU country known for state intervention, such as France, actually temper the trajectory of FDI screening? |
The deal marked the turning point for an infant legal profession, essentially creating a new practice area dedicated to FDI screening. Antitrust lawyers switched tracks, with one telling me his “entire practice follows from the Kuka deal”. They also started spending more time waiting for the outcome of reviews. Before the deal, Germany’s screening team was known to take a matter of days to clear potentially sensitive military related deals. Now it can take months for a phase 1 review.
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The US's world-leading biotech industry is navigating contradictory signals. Tough competition from Asia, a clampdown on partnerships with Chinese start-ups and funding cuts are hampering progress.
It's now digesting rumours the sector could be added to the US's outbound screening framework. To secure its future in an era of protectionism, industry executive Kaouthar Lbiati argues the US must embrace synthetic biology and biomanufacturing. |
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| Qatar is building a competitive, interconnected business environment |
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Recent surveys consistently rank geopolitics as one of the top concerns of global business leaders. The proof is starting to show in their official communications. Mentions of geopolitics or related terms in earnings calls around the world have drastically increased since 2022 and surged over the last quarter to feature in more than 3000 calls.
It's a development encapsulated in this chart by my colleague Alex Irwin-Hunt based on data tracked by AlphaSense. |
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