Buying-up Europe No More? How the European Union has Responded to the Challenges of Chinese Foreign Direct Investment

Ethan Kable

doi:10.5642/urceu.202101.07

Abstract

towards Chinese outward foreign direct investment (OFDI) has evolved over the past decade. I contend that the EU was quite receptive to Chinese OFDI at the beginning of the decade, due to both ideological leanings and the economic context of a post-crisis Europe. I then illustrate how the EU slowly adopted a more guarded and critical approach towards Chinese OFDI. This paper will focus specifically on four key issues surrounding Chinese OFDI policy: national security, technology transfers and IP theft, state support for Chinese firms, and market access, ultimately arguing that bilateral investment treaty (BIT) negotiations and the new EU investment screening mechanism are the main policy levers being used to address these concerns. For the sake of this paper, I will use the OECD’s definition of OFDI.

Highlights

The rise in Chinese outward foreign direct investment (OFDI) into the EU over the past decade has been truly remarkable
This paper looks at how, at an institutional level, the EU’s perception of and strategy towards Chinese outward foreign direct investment (OFDI) has evolved over the past decade
At an institutional level, the EU has toughened its stance on foreign investment as it relates to national security, technology transfers, state support, and unreciprocated market access over the past decade

Summary

Introduction

The rise in Chinese outward foreign direct investment (OFDI) into the EU over the past decade has been truly remarkable. Competition concerns were raised most notably during COVEC’s (Chinese Overseas Engineering Company) unfinished highway project in Poland, in which they were able to win the construction contract with a 30-50% lower bid price than competitors, and a 2012 EU investigation into Huawei and ZTE for receiving unacceptable government subsidies (Zhang & Van Den Bulcke, 2014). All of these cases did little to paint Chinese investment in a positive light and pushed the EU to take a more critical stance towards Chinese investment

Evolution Of The Eu’s Position

Specific Concerns With Chinese Economic Policy

How The Eu Is Pushing Back On Beijing

Findings

Conclusion