With global equity markets reeling from the COVID-19 pandemic, companies with cushy cash reserves looking to deploy dry powder are entering what could be one of the most lucrative acquisition opportunities in the last decade. Though activity in the mergers & acquisitions (M&A) space has been muted thus far, an extended downturn is likely to spark the interest of well-endowed asset managers and corporations seeking distressed assets in need of a bailout.

Such conditions have given rise to concerns regarding potential acquisitions by cash-flush Chinese entities. These fears have been significant enough to prompt the EU’s competition commissioner, Margrethe Vestager, to recommend that member-states directly purchase shares in vulnerable domestic tech companies operating in sensitive spaces such as telecoms and semiconductors.

The irony between Vestager’s comments and the function of her office signals Europe’s willingness to demonstrate explicit pushback against Chinese takeovers, particularly during times of calamity when valuations are depressed. During the global financial crisis and the subsequent Eurozone crisis, Chinese investment in Europe accelerated among some of the hardest-hit economies in the region, including Greece, Italy, Spain, and Portugal. Other parts of Europe, including the sub-region of Scandinavia and industrial powerhouses such as Germany, the United Kingdom, and France have also seen their fair share of the Chinese deluge of foreign direct investment (FDI).

This time around, the forecast of Chinese activity assumes that much of the capital will be deployed among mature tech firms with significant research & development capabilities. As the US-China trade war drags on, Europe will be a battleground for any possible partition of the global tech ecosystem that compels a choice between doing business with American or Chinese firms.

Beijing’s decision calculus in pursuing European tech firms is a maneuver designed to pre-empt any US-led pressure to boycott, blacklist, and/or impede EU tech firms from engaging with China, while it gradually weans itself from foreign supplier reliance. As home to some of the most valuable companies in areas such as 5G telecommunications and robotics, Western Europe’s expertise is perhaps the last remaining option for China to ensure technology transfer keeps the country apace in its tech supremacy ambitions.