Jeremy Clegg and Hinrich Voss

The purpose of this paper is to analyse the factors that have driven and constrained Chinese investments in the EU from 2000-10 in order to develop policy recommendations to the EU and its Member States for increasing their share of Chinese foreign direct investment (FDI). 

  • Notwithstanding this rising trend and the current magnitude of Chinese outward foreign direct investment globally, the economic footprint and impact of Chinese investments in the EU is currently small. This is despite the EU being very open to FDI in general and to Chinese investments specifically and despite significant efforts by individual EU Member States to identify and attract Chinese investors. 
  • Countries that have a structured approach to Chinese investors, such as Germany, Sweden and the UK, have been successful in attracting investment. This is amplified when the host country has a large market, and has resulted in the concentration of FDI in a few leading EU Member States. This distribution raises questions about the underlying motives of Chinese investments and about the nature of the competitive advantages of Chinese investors. 
  • The time is right to develop a coherent policy towards inward and outward FDI with China. An integrated agreement that serves EU firms' interests in the remaining hard-to-access sectors in China and the EU's desire to promote beneficial inward investment will strengthen the Union’s international relations and bargaining power.

This paper forms part of the ECRAN project's publication series. ECRAN is a three-year project funded by the European Union to provide advice on China to European policy makers. More about ECRAN.