Chinese Foreign Direct Investment in the European Union: Critical analysis of a process in the making

Abstract

Aiming to overturn the mainstream thinking regarding the exclusive use of Foreign Direct Investment by the major players of Western economies, this paper analyzes the deployment of this form of internationalization by Chinese companies in the European region, presenting its main trends, patterns and motivations. In order to assess the role and importance of FDI from China towards Europe, this paper will revolve around a critical scrutiny of the various steps that took the Middle Kingdom from a large receptacle of FDI, mainly from developed countries, to a major source of FDI globally, making investments in developed and undeveloped countries. A careful analysis of the current Chinese presence in Europe is then carried on, with the aim of finding one (or more) explanation regarding the evolution of a process that, after years of steady growth, has recently suffered several setbacks. Finally, three of the main challenges and opportunities that are projected to be of high economic and strategic interest for the future investment environment between China and Europe are reviewed, namely the "One Belt, One Road" initiative, the EU-China "Comprehensive Agreement on Investment", and the combination of China's "Made in China 2025" plan and Europe's "Industry 4.0". As a matter of fact, although the chances of realization of these plans are, to date, somewhat debatable, they still represent the substantial architecture for present and future development of the relationship between the two world powers.