Geographical and Strategic Factors in Chinese Foreign Direct Investment in Europe

Abstract

Recently, the volume of Chinese FDI made in Europe has reached the level of European FDI in China (now constrained by restrictions and risks). It equaled the level of FDI made by Chinese firms in the United States before they began to decline in the last two years. The Chinese economic presence in Europe is divided into three parts in terms of volume, destination, and type of acquisition: The heart of Europe is made up of the three major destinations (Germany, UK, France), where more capital-intensive investments are made, followed by other Western European countries (EU-15). New member states (NMS) that joined the EU in 2004, 2007, and 2013, and Western Balkan countries, in accession to the EU, are associated with China in the 16+1 Format (with the exception of Kosovo) and are another gateway to Europe. They receive less direct investment because of smaller market opportunities but China is building infrastructure (ports, highways, railways)—segments of the Silk Road that will bring Chinese products to the mature markets of the EU.