If money talks, Chinese money is particularly loud these days. In the past five years, Chinese investment abroad largely dominated by the countrys giant state-owned enterprises has tripled. Today, China accounts for nearly 10 percent of global foreign direct investment outflow.

In an era of austerity, influxes of investment are often appreciated. But not all Chinese money receives a warm welcome as evidencedby Germanys recent decision to limit investment into its strategic infrastructure. This is especially truewhen it comes to granting China access to Western infrastructure, sensitive telecoms and high-tech companies.

Western countries are right to pay careful attention to what Chinese companies do with their money. The trouble, however, is there is no agreed-upon standard for determining when an investment poses a security risk and no coordination even among the closest Western allies in deciding which investments should be blocked. As Chinese money continues to flow westward, the future of European and North American security could depend on governments in those regions coming up with a common policy on where that money can be spent.

Fortunately, governments are starting to take note of the problem.Earlier this year, France, Germany and Italy called on the European Commission to rethink EU investment rules in light of a lack of reciprocity, given that Beijing imposes tight restrictions on foreign companies looking to operate in China.

While reciprocity may at first seem to have little to do with access to sensitive infrastructure, the two issues are in factintricately linked.Both are core components of Chinas economic strategy: Made in China: 2025.

Beijings economic strategy, announced in May 2015, is to strengthen its hand in global production chains. It is aiming to raise the proportion of core components that are made in China to 40 percent in 2020 and 70 percent by 2025, and it is targetingin 10 core areas, including aviation, new materials, high-end manufacturing, integrated circuits and next generation information technology.

Even when one country determines that a Chinese buyout of a Western firm is OK, others might view it as a security risk.

As some observers have pointed out,the strategy could have serious consequences outside China. The plan relies on three pillars: first, to create a basic sanctuary for Chinese companies, using non-tariff barriers to bar competition from Western multinational companies; second, to subsidize Chinese companies to better compete in international markets; and third, to enable Chinese companies to dominate certain key sectors related to national security, and smart technologies and manufacturing. According to the research center MERICS,Western decision-makers should be aware that Chinas long-term goal is to replace foreign with domestic technology.

At Davos in January, Chinese President Xi Jinpingpromised to open Chinas mining, infrastructure, services and technology sectors to foreign investment, and many western firms are now waiting to see how the issue is tackled domestically this fall. Xis pledge is already looking shaky. A new cybersecurity law passed in Beijing earlier this month walls off foreign investment into Chinas critical information infrastructure and indicates skeptics may be right about Beijings overall direction.

Many Western governments including the U.K. have discovered that it is very difficult to accurately assess risks that come with accepting investment from Chinese firms, because of uncertainties around state control and state subsidies and concerns about private companies acting as proxies for the Chinese government.

It is still unclear how much power Beijing wields over both private and state-owned enterprises. They cannot act against the wishes of the Ministry of State Security or other similar agencies, but does that mean they should be seen as vessels for state espionage or subversion?

The result can be a lack of consistency. Even when one country determines that a Chinese buyout of a Western firm is OK, others might view it as a security risk.Canada, for example, green-lighted the purchase of Norsat, a Canadian satellite communications firm, by the giant Chinese telecoms firm Hytera. Several weeks later, the U.S. Pentagon decided to review its contract with Norsat over concerns that a political desire for more investment could have taken precedence over a proper review.

Similarly, the U.K. allowed a Chinese consortium to acquire a 49 percent stake in Global Switch, a British-based cloud computing center. After a Chinese financial firm within the consortium, AVIC Trust, was found to be a subsidiary of a Chinese defense industrial giant, the Australian defense department decided to withdraw as a client from Global Switch.

In an age in which military advantage can be upended by technologies arising in Shoreditch and Silicon Valley, better monitoring of foreign investment is indispensable to security.

The two cases reveal a lack of communication even among the Five Eyes allies Australia, Canada, New Zealand, the U.K. andthe U.S. that make up the most interconnected intelligence-sharing alliance in the world. It also demonstrates the complications that can arise when one ally does not agree with anothers assessment.

To be sure, any international dialogue that sets out to restrict investment can only be advisory; in the current economic climate, countries will not agree to anything that waters down their right to accept foreign investment. But Western countries, beginning with the Five Eyes allies, would be wise toquickly create a common mechanism to appraise investment from China and elsewhere.

Regular dialogue between foreign investment officials in allied countries would serve their shared security. The U.K., particularly, needs to establish a government agency responsible for screening foreign investment. Sharing data and communicating about trends related to the latest investment surges into key sensitive technologies will allow also governments to develop a more holistic view of what foreign states are targeting in any given investment cycle.

In an age in which military advantage can be upended by technologies arising in Shoreditch and Silicon Valley, better monitoring of foreign investment is indispensable to security.

John Hemmings is director of the Asian studies center at Henry Jackson Society.

This article is part of an occasional series: China looks West

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Risky business: Keeping an eye on Chinese investment - POLITICO.eu