March 7, 2018 / 3:33 PM / a year ago

Germany could re-examine foreign investment threshold: senior official

BERLIN (Reuters) - The German government has set the threshold at which it can intervene in response to foreign investments in German companies too high and may have to think about lowering it, a senior official in the economy ministry said on Wednesday.

FILE PHOTO: State Secretary at the German Ministry for Economic Affairs Matthias Machnig addresses a news conference during G20 digital ministers in Duesseldorf, Germany April 7, 2017. REUTERS/Wolfgang Rattay

Berlin tightened controls on foreign investments last year after a series of high-profile takeovers in Germany by Chinese firms, by extending a 25 percent shareholding threshold at which Berlin can intervene to additional business sectors.

“In my opinion the 25 percent threshold has not really worked,” Matthias Machnig, state secretary in the ministry, said in a debate on foreign investments hosted by members of the Greens party in parliament.

“I think there is a need for change here. We need to have a serious discussion about this,” he added. “I expect there could be initiatives in this direction.”

Machnig, a member of the center-left Social Democrats (SPD), played a key role in the rule changes. But he is not expected to remain at the ministry once it switches hands to Chancellor Angela Merkel’s Christian Democrats (CDU) in a new government.

The comments follow an intense debate about Chinese investments in Europe, after a series of corporate takeovers in western Europe and infrastructure investments, notably in Greece and the Balkans.

They also come amid concerns over protectionism and a trade war after U.S. President Donald Trump said he plans to impose duties on steel and aluminum to counter cheap imports, especially from China.

In Germany, the debate about Chinese investments has been fueled in recent weeks by Chinese carmaker Geely’s [GEELY.UL] move to acquire a stake of almost 10 percent in Germany’s Daimler (DAIGn.DE).

In response to a request from Germany, France and Italy, the European Commission unveiled a proposal last year for a European investment screening mechanism, which is now being debated by member states.

Of the 28 countries in the European Union, only 12 have national rules for government intervention in response to foreign takeovers.

Reporting by Noah Barkin; Editing by Michael Nienaber and Hugh Lawson

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