Chinese Investments in Europe Have Soared Tremendously Over the Last Decade
China and Europe have enjoyed steady economic and commercial ties for almost a century. However, the makeup of the economic transactions between the two regions has significantly changed over the past 10 years. An obvious change was the amplification of its investments across Europe. Over the last 8 years alone, Chinese foreign direct investment (FDI) has multiplied almost 50 times. In 2008, China’s investments across Europe were worth less than $840 million. Within a span of 8 years, its investments had reached an astounding $42 billion by 2016. Traditionally, European investments into the Chinese economy surpassed the flow of outbound FDI from China. However, today, the Chinese investments in Europe are more than 4 times the European investments coming into China.
The relatively sturdier performance of the Chinese economy in the face of the 2008 financial crises put it in the driving seat of the world economy while Europe is still reeling from its effects after a decade. As a result, there has been a paradigm shift in the economic equation in Sino-European relations.
Total Chinese investments across the European region are worth over $348 billion, including the Greenfield investments and the mergers and acquisitions by the Chinese businesses. Chinese state-owned and private businesses have acquired controlling stakes in over 350 companies across Europe in the last decade.
China has varied interests across the European region. Its investments are spread across a diverse range of industries. The futuristic industries, such as those dealing in high tech assets, cutting edge technology, and knowledge-based businesses are generally the top priority. However, there are substantial Chinese investments in the financial markets, agricultural research and in commercial businesses across Europe, as that will gain Chinese businesses better access into European markets, and through them, to markets such as the US.
These investments are very much in line with China’s political ambitions. They also fit into its economic vision. These large investments across strategic sectors provide China with the technology, ideas, and research it needs to fuel its economic vision of being a technology leader. At the same time, it can leverage the economic power to wield substantial diplomatic influence across Europe. Although the Chinese investments in Europe are still small compared to the US, the recent trend suggests that it’s fast catching up. As the political climate across Europe turns more nationalistic, smaller European economies are increasingly welcoming Chinese investments and Chinese businesses. Italy has recently joined in the ambitious BRI project, while a Chinese state-owned firm has acquired a controlling stake in the Piraeus Port in Greece.