From ports to cars to food processing, China’s foreign direct investment (FDI) in the European Union (EU) concerns a wide variety of economy sectors. While China’s FDI in the EU has grown exponentially, it still is only a small part of the total FDI into EU.
Despite the government’s role in the growth of Chinese FDI since 2007, Chinese companies invest abroad in similar ways to other commercial entities. They are investing to gain market share, improve brand recognition and reputation, and find resources and assets. Chinese investors show a preference for investments in the largest western European countries and especially Germany. However, as China’s global importance and economic power increases, worries about the possible economic and political consequences of Chinese FDI are also intensifying.
Negotiations on an EU-China bilateral investment treaty were launched in 2013. EU enterprises call for such an investment agreement to ensure more reciprocity in business relationships. Several EU Member States have used different approaches to attract Chinese investment, leading to fears of a “race to the bottom”. A single EU-China agreement would remove most of these issues. Chinese entrepreneurs for their part see the different Member State approaches as leading to fragmentation of markets (laws, languages), labour laws and social security, and therefore as a barrier to their effective investment in the EU.
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