Chinese Investment in Europe: A Shifting Landscape
In 2025, Chinese foreign direct investment (FDI) in Europe surged to a seven-year high, reaching EUR 16.8 billion. This marked a 67% increase from the previous year, driven primarily by a rebound in mergers and acquisitions (M&A) activity. However, the report by Rhodium Group and MERICS reveals a more complex picture, highlighting both the strengths and challenges of Chinese investment in the region.
The Rebound in M&A
The M&A sector witnessed a remarkable recovery, with deals worth EUR 7.9 billion, a 89% jump year-on-year. This surge was fueled by strategic acquisitions in consumer goods and gaming, including Tencent's purchases of Easybrain and a stake in Ubisoft's Vantage Studios. These deals not only boosted Chinese FDI but also underscored the country's interest in Europe's consumer and entertainment sectors.
Greenfield Investment: A Record High
Greenfield investment, the construction of new facilities, also reached a new peak at EUR 8.9 billion. This growth was driven by the expansion of battery and EV-related projects, with CALB, CATL, and Gotion leading the way. However, the report warns that the momentum may be slowing, with a decline in the value of newly announced greenfield projects in 2025.
The Dominance of the Automotive Sector
The automotive sector remained the largest recipient of Chinese FDI in Europe, attracting EUR 7.6 billion in 2025. This focus on the EV supply chain is significant, but it also highlights the sector's vulnerability to policy shifts and regulatory pushback.
Shifting Investment Patterns
While Hungary has traditionally been the top destination for Chinese FDI in Europe, its share has fallen to 23% in 2025. Germany and France have gained ground, with their combined share rising to 34%. This shift reflects changing investment priorities and the need for Chinese firms to diversify their European footprint.
The Role of Exports
The report also delves into the role of exports, noting that Chinese goods exports to Europe increased by 9% in 2025. This growth is particularly strong in sectors that have previously attracted significant Chinese FDI, such as batteries and wind equipment. The report suggests that Chinese firms are favoring exports over foreign investment, which may be a key factor in the slowing greenfield investment momentum.
Geopolitical and Macroeconomic Factors
Geopolitical uncertainty and macroeconomic conditions have played a significant role in shaping Chinese investment patterns. The weakening Chinese currency has boosted export competitiveness, while regulatory scrutiny and policy shifts in Europe have created additional uncertainty. The report argues that these factors, combined with the domestic production capacity of Chinese firms, have made exports a more attractive option.
The Future of Chinese Investment in Europe
Looking ahead, the report predicts that Chinese firms will continue to pursue opportunities in global markets, with a focus on exports. The key question is whether this reliance on exports will persist, or if there will be a steady increase in outbound investment. The report concludes that the future of Chinese investment in Europe will depend on a range of factors, including economic, political, and policy conditions.
In conclusion, the report by Rhodium Group and MERICS offers a comprehensive and nuanced view of Chinese investment in Europe. It highlights the strengths and challenges of the sector, and provides valuable insights into the shifting patterns and trends that are shaping the future of Chinese FDI in the region.
