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European investment by Chinese companies saw a notable increase in 2024, with a focus on electric vehicle and battery projects in Hungary. However, there was a decline in investments in the UK, Germany, and France.
Data from the Mercator Institute for China Studies and Rhodium Group revealed that Chinese foreign direct investment in the EU and UK rose by 47% to €10bn last year. Despite this growth, total FDI was still significantly lower than the peak in 2016, with a few key players dominating the investments.
Max Zenglein, chief economist at Merics, commented on the attractiveness of the EU for Chinese investments but also warned about the potential strategic implications of such investments. Chinese companies have shifted from mergers and acquisitions to greenfield investments, with a focus on projects like CATL’s battery facility in Debrecen and BYD’s electric vehicle plant in Szeged, both in Hungary.
Hungary remained the top destination for Chinese investments in Europe for the second consecutive year, while the UK, Germany, and France saw a decrease in Chinese investments. Prime Minister Viktor Orbán of Hungary has been supportive of Chinese investments as a boost to the country’s economy.
Chinese carmakers are expanding globally due to domestic challenges, such as overcapacity and declining demand. The EU’s tariffs on Chinese car imports have pushed companies to invest in local production within the bloc. However, there has been a decline in new investment announcements in the electric vehicle sector, with some projects being abandoned.
Despite challenges, there have been some notable acquisitions, such as Tencent’s purchase of Techland. Chinese investments in strategic sectors like renewable energy are facing increased scrutiny in Europe, but there are efforts to ease tensions between the EU, China, and the US.