Chinese foreign direct investment (FDI) in Europe and the UK experienced a notable rebound in 2024, marking the first increase since 2016. The total investment reached EUR 10 billion, reflecting a 47% rise from the previous year. This resurgence was primarily driven by a surge in greenfield investments and a significant uptick in mergers and acquisitions (M&A) activities. Greenfield investment, in particular, grew by 21%, hitting a record high of EUR 5.9 billion, while M&A transactions more than doubled to EUR 4.1 billion. Notably, Hungary emerged as the top destination for Chinese investment in Europe for the second consecutive year, buoyed by large-scale electric vehicle (EV) projects.
Despite the rebound, the overall Chinese investment footprint in Europe remains relatively limited compared to other major investors. While China is establishing itself as a lead investor in certain countries like Hungary, its total stock of EV-related FDI in Europe remains small in comparison to overall FDI stock in the region. The automotive sector, particularly EV projects, continued to dominate Chinese investments in Europe in 2024, attracting EUR 5.2 billion. However, there was a noticeable decline in newly announced Chinese EV projects in 2024, raising concerns about the sustainability of the increase in Chinese FDI in Europe.
European policymakers have become increasingly wary of Chinese investments, leading to a rise in investment screening cases involving Chinese companies. The European Commission proposed revisions to tighten the EU’s FDI Screening Regulation, reflecting growing concerns about national security and technology transfer. The proposed changes aim to condition Chinese inbound investments in strategic sectors and introduce mitigation measures to address potential risks. These regulatory developments, along with geopolitical uncertainties and economic factors, are likely to shape the trajectory of Chinese FDI in Europe in the coming years.
Looking ahead, the future of Chinese FDI in Europe hinges on various factors, including China’s economic conditions, EU-China relations, and evolving trade policies. While ongoing projects are expected to sustain greenfield FDI levels in the short term, challenges such as security concerns and regulatory scrutiny could impact investment decisions. The commercial and political dynamics influencing Chinese investments in Europe, particularly in the EV sector, will continue to evolve, shaping the landscape of Chinese FDI in the region.
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