The Institut Francais des Relations Internationales (IFRI) has drawn attention to the rise of Chinese foreign direct investment into Europe.
These observations were made in a report, Chinese Investment in Europe: A Country-Level Approach, which states that while China-originated FDI is low, it has seen a notable and rapid growth in recent years.
The authors of the report wrote: “Of total FDI stock held in the European Union by the end of 2015, China only accounted for 2% according to Eurostat figures, and its investment stock in many European countries remains low when compared with older investors. However, the facts on the ground are evolving rapidly, and China still has plenty of room to grow: The total stock of Chinese outbound direct investment worldwide still only represents 10% of its national GDP.”
They added: “Compare this to France or the UK (50%), Germany (39%), the US (34%) and Japan (28%). If China continues on its path towards more advanced levels of economic development, we must expect a massive further increase in its outbound FDI.”
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Despite this, IFRI said China still needs Europe more than Europe needs China. And for many reasons, IFRI said, Chinese investment is, and should be, encouraged.
However, there are growing concerns. IFRI said challenges include the role of the Chinese state in the economy, a lack of reciprocity and fair competition, uncertainty around security-related critical infrastructure and sensitive technologies, investments as a source of political and geopolitical influence, and broader regulatory concerns.
IFRI added: “Finding the right balance between addressing these concerns and holding to the principles of economic openness has proven a serious challenge both in the context of Europe-China relations and for the European Union more generally. European concerns are related to a combination of issues that are often hard to disentangle and are prone to hype and politicisation.”
These concerns are reflected in a briefing document released last week by the US’s Congressional Research Service.
The document claims that certain members of Congress contend that some foreign investment within the US is directed, controlled, or funded by foreign governments, particularly China, and that poses a risk to national security.
