Britain holds up China aerospace deal over national security

File photo showing an Airbus A320 aircraft. British government officials appear worried that even a small aviation-related deal involving a Chinese company could have important national security implications.
File photo showing an Airbus A320 aircraft. British government officials appear worried that even a small aviation-related deal involving a Chinese company could have important national security implications.PHOTO: REUTERS

LONDON (NYTIMES) - Fears of a Chinese takeover of companies important to national security have felled deals around the world both big and small. Now even the sale of a minor airplane parts maker is being closely examined for serious risks.

In delaying the proposed takeover of the parts-maker, Northern Aerospace, by a rival owned by a Chinese conglomerate, British government officials appear worried that even a small supplier to Airbus and Boeing could have important national security implications.

It is the latest instance of countries around the world showing scepticism about Chinese money. Lawmakers in Washington are battling with President Donald Trump over whether to lift penalties on ZTE, a Chinese telecommunications company whose phones were barred for sale on US military bases. And in Australia, lawmakers are considering whether to block Huawei, China's biggest telecom company, from contracts to upgrade that country's wireless networks to the next-generation 5G standard.

Governments from the United States to Germany worry that China will effectively buy up the technologies it needs to create state-funded Chinese giants that would rival those from America and Europe.

Over the past several years, regulators in Washington have quashed Chinese investments in US companies working on sensitive technology. This year, Trump blocked a US$117 billion (S$159 billion) takeover bid for Qualcomm, the computer chip giant, amid concerns about US efforts to beat China in the race for 5G technology. And both the White House and lawmakers have proposed further tightening the process for reviewing foreign investments in US companies, with a particular eye toward China.

European countries have followed suit, with some calling for a stronger review process after a flurry of deals that gave Chinese purchasers access to innovative technology in areas like robotics. Even Canada, where Chinese investment has long been more welcomed, last month blocked a Chinese purchase of a construction company, citing national security.

Britain had sometimes seemed like an outlier, seeing Chinese investment as a way to strengthen the two countries' economic ties. Chinese money is, for example, helping to build Hinkley Point, a new nuclear power plant on Britain's west coast.

But developments this week appeared to reflect a rise in scepticism.

The British government on Sunday (June 17) moved to intervene in the sale of Northern Aerospace by asking the country's Competition and Markets Authority to investigate.

The proposed buyer is Gardner Aerospace, a bigger supplier based in Derby - but sold last year to Shaanxi Ligeance Mineral Resources, a Chinese industrial conglomerate. That deal was meant to help give Gardner greater access to the Chinese market.

Gardner had offered to pay 44 million pounds (S$78.8 million) for Northern Aerospace. But on Monday, the competition authority stayed the deal while it investigates the transaction. It is scheduled to deliver a report on the deal by July 13.

A spokesman for Britain's business department said in a statement, "This is a statutory process we have followed a number of times before to ensure national security implications of a proposed sale are fully assessed and accounted for."

In a statement on Wednesday, Gardner's executive chairman, Nick Sanders, said that his company was cooperating with the government's inquiry into the deal. A representative for Northern Aerospace was not immediately available for comment.