Chinese direct investment in Europe on the rise

BOFIT Viikkokatsaus / BOFIT Weekly Review 2015/09

Foreign investment flows from China to Europe have grown briskly in recent years. Latest figures from Eurostat show that the stock of foreign direct investment more than tripled in 2010–2012. According to the more recent figures from the Rhodium Group and the Heritage Foundation, which track large FDI investments of Chinese investors, the flow of investment from China to Europe more than doubled in 2014. Investments were worth about $18 billion.

The Chinese have been active investors in Europe in recent years. However, the stocks and flows of Chinese FDI are still relatively small compared to all foreign investment in Europe, which in large part still comes from the United States. Eurostat figures show that the stock of Chinese FDI in Europe is only about 1 % the size of the stock of US investments in Europe. At the same time the flow of Chinese investment in the total investment flow into Europe is a few per cent.

According to the latest figures, the volume of foreign direct investment from Europe to China is still larger than FDI flows from China to Europe.

The number of Chinese acquisitions of European firms is soaring at a time when growth in FDI from countries outside Europe has otherwise slowed. Both state-owned investment corporations and private companies have invested. Notable acquisitions include the real estate purchases of the China Investment Group in the UK, the China Investment Corporation’s massive investment in the Italian energy sector, as well as Dalian Wanda Group’s expansion into the European entertainment industry.

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