~ China’s investments in Europe rise for the first time in a decade—with Hungary leading a new wave of Chinese investment ~
By Tom Clifford in Beijing
China has redirected its financial strategy for Europe just as investments by Beijing into the continent have grown for the first time in nearly a decade, two key reports show. The figures, released on Tuesday, coincided with a keynote speech by President Xi Xinping emphasizing the importance of domestic manufacturing.
The year 2024 saw investments into Europe from Beijing increase for the first time since 2016, the reports say. Crucially the traditional powerhouses, Germany France and Britain, the reports stated, have been overtaken by Hungary as the continent’s leading magnet for Chinese capital.
Investments into Europe shot up 47 per cent from a year earlier, to €10 billion according to joint reports from the Mercator Institute for China Studies and Rhodium Group, two leading research houses.
The watershed year of 2016 was pivotal in EU-Chinese economic ties. It saw several well-known German businesses taken over by Chinese investors.
That resulted in an abrupt volte-face by Europe as the EU set up a screening mechanism to guard its key assets. Consequently, Beijing has been nurturing new investment destinations on the continent.
Its closest European partner, Hungary attracted 31 per cent of all Chinese investment in Europe, easily overtaking Germany, France and Britain. Those three accounted for a combined 20 per cent of all Chinese investments on the continent, a plunge from a four-year average of 52 per cent.
The shift comes as Xi stressed the importance of self-reliance in advanced manufacturing as the foundation stone for economic success.
The president made the comments while visiting a state-owned producer of bearings in Luoyang city, Henan province.
“China has always adhered to the path of developing the real economy,’’ he said.
“From the past reliance on imported matches, soap and iron, to now becoming the world’s largest manufacturing country with the most complete industrial categories,” Xinhua quoted Xi as saying.
The venue where he was speaking is highly symbolic. The Luoyang Bearing Group has been at the forefront of development since the 1950s and products were used in key national projects such as the Three Gorges Hydropower Station and manned spaceships.
“We have taken the right path,” he told cheering workers at the factory.
“We must continue to empower manufacturing sectors, insist on self-reliance and try to grasp core technologies.”
The figures for Chinese investment into Europe show the continent is facing a dilemma.
While the European Commission sets trade policy for the 27-member bloc it has no say over national-level investment policies, except for screening for foreign subsidies and undeclared government subsidies or handouts. This is notoriously difficult to prove. And more Chinese investment is likely amid trade tension with the US. But the latest figures show that it is Eastern Europe that will benefit most.
Consequently, analysts warn that investments without more stringent examination will undermine Europe’s manufacturing.
“As Chinese firms move into Europe – and with no obligation to invest, create jobs locally or share technology and know-how – Europe’s industrial heartland risks shrinking and turning into assembly lines for components made in China,” read a research paper from the European Council on Foreign Relations released last week.
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