Agencies
Beijing
Chinese investment in Europe last year dropped to the lowest in 13 years since 2010, according to an annual report published on June 6 jointly by independent research provider Rhodium Group and German think tank e Mercator Institute for China Studies (MERICS).
As per the report, Chinese direct investment (FDI) in Europe (defined here as the EU-27+UK) slipped again to EUR 6.8 billion last year (2023), from EUR 7.1 billion in 2022, and it was the lowest level since 2010.
The report shows that Chinese corporate investors faced challenges and uncertainties last year from a mix of political and economic factors in Europe and globally, while uncertainty about the global economy impacted the investment environment for Chinese firms, amid rising geopolitical tensions that include the protracted war in Ukraine and new conflict in the Middle East.
China’s lacklustre growth in the post-Covid period has weakened the financial footing of many Chinese firms, as per the report. Commenting on the declining Chinese FDI, Cheng Cheng-ping, a professor at Taiwan’s National Yunlin University of Science and Technology, told The Epoch Times, “From this [investment] figure, we can certainly see that China’s economic situation is very bad.”
“Since 2023, China’s economy has taken a turn for the worse. Although the official GDP [gross domestic product] growth rate is about 5 percent, the real situation is very bad, and its export situation is also very bad, so its total foreign investment is also declining,” the professor added.
“Strict capital controls and the depreciation of the Chinese yuan (CNY) also disincentivized outbound investment. The European Union (EU) is seeking to recalibrate the EU-China relationship and strike a balance between de-risking and cooperation, a shift that has stoked the uncertainties facing potential Chinese investors. This all happened amidst enhanced oversight of foreign investment as economic security has risen up the agendas of European governments,” the report read.
“In 2023, Chinese investment in the EU and the UK (hereafter referred to collectively as “Europe”) slipped further, though only marginally, from EUR 7.1 billion in 2022 to EUR 6.8 billion. This was the lowest level of investment seen since 2010,” said the report, adding that at the same time, an uptick in newly announced greenfield investments suggests that the precipitous decline in Chinese investment since 2016 may be levelling off, as investment in EV sector continues.
As per the report, Chinese FDI in Europe remains heavily concentrated. “As overall investment levels have come down, the relative importance of individual deals and investors has increased,” said the report, adding that the top five Chinese investors consistently made up two thirds of all Chinese investment into Europe between 2021 and 2023, compared to 45 percent in 2020.
