China Market Insider China is Investing More in Europe Again

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Asia Waypoint

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Chinese investments in Europe have grown for the first time in nine years, according to a recent report by two research institutes. One country particularly benefits.

In 2024, foreign direct investment (FDI) from the People's Republic in the EU and the UK grew by 47 percent to ten billion euros (approx. 11 billion USD). It was the first increase since 2016, when several EU countries began to worry about too much "dependence" on China and took a closer look at investments in leading technology companies in Europe (such as the purchase of Kuka).

However, the remarkable rise of the Chinese economy in green technologies such as battery manufacturing, electric vehicle construction, and solar and wind power plants has triggered increased expansion of leading Chinese "clean tech" manufacturers abroad.

Part of these investments is now flowing back into Europe despite the political mistrust—which has been strongly influenced by the anti-China policies of the USA in recent years.

"The growing appetite of Chinese companies for capital-intensive greenfield investments abroad drove the new momentum—despite a volatile investment environment," states the report "Chinese Investment Rebounds—Despite Growing Frictions" by the Mercator Institute for China Studies and the Rhodium Group.

Investments in new factories, namely "greenfield investments," especially in the automotive sector, were responsible for the recovery of the statistics. Examples include the investments by Chinese battery manufacturers CATL (more than seven billion euros) and Sunwoda Electronic (more than 1.5 billion euros, appürox. 1.7 billion USD) in new battery plants in Europe.

BYD is building a large new factory for electric cars with an investment sum of more than 1.3 billion euros (approx. 1.4 billion USD). All the examples mentioned so far are being realized in Hungary. Unlike, for example, the German government—which, in tandem with the USA, increasingly publicly expressed concerns about China as a "rival"—Hungary's Prime Minister Viktor Orban has consistently continued to focus on good economic relations with Beijing in recent years.

This strategy by Hungary is now paying off. The country is currently attracting far more Chinese investments than Germany, England, or France, which were previously the most popular locations for the Chinese.

"Hungary maintained its role as the main target for Chinese investments in Europe for the second year in a row—thanks to large-scale projects in the field of electromobility. In 2024, Hungary attracted Chinese investments amounting to 3.1 billion euros (approx. 3.5 billion USD), a 73 percent increase compared to 1.8 billion euros (approx. 2 billion USD) in the previous year," says the report, which cannot yet be compared with official Chinese FDI statistics because they are not yet available.

However, publicly available data, which the study's authors work with, shows that four of the ten largest ongoing Chinese investment projects in Europe have gone to Hungary, including three battery factories for electric vehicles and a plant for manufacturing electric cars.

Only one large battery factory by the Chinese manufacturer Gotion is being built in Germany, with a total investment of over 1.2 billion euros. Envision is building a similarly valued battery plant in France. However, most jobs—many thousands—created by the new factories of Chinese companies are emerging in Hungary.

In other economic sectors such as entertainment and media, as well as consumer goods and services, China's investments in Europe have increased significantly again. In the latter two sectors, however, this recent increase was also due to a few large M&A transactions, including Tencent's purchase of Techland (for a sum of 1.5 billion euros, approx. 1.7 billion USD) and Haier's acquisition of the Dutch refrigeration division of Carrier (for 716 million euros, approx. 818 million USD).

It will be interesting to continue to follow whether the politicization of all economic relations, as currently pursued by the US government, or a course based on cooperation and technological exchange—especially in green technologies—will prevail in the future between China and Europe.

*Henrik Bork is the Managing Director at Asia Waypoint, a consulting agency specializing in China with headquarters in Beijing. "China Market Insider" is a joint project of Vogel Communications Group, Würzburg, and Jigong Vogel Media Advertising in Beijing.

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