January 18, 2019
Emerging EU Policies Take a Harder Look at Chinese Investments
Like the Belt and Road Initiative (BRI), foreign direct investment (FDI) from the People’s Republic of China (PRC) now has a much broader reach than Beijing’s own backyard. It is well-known that Washington is actively working toward mitigating U.S. vulnerabilities to PRC investments in strategic sectors, and those that contain critical technologies and infrastructure. However, Europe, a region that also offers access to high technology desired by the PRC, is also taking a harder look at its own potential investment vulnerabilities. This process is leading to increasing debates and increasing regulation, both of which could impact the future course of Chinese investment in Europe.
While overall PRC foreign investment fell in 2017, investments in Europe were more resilient, increasing to 25 percent of the PRC’s global investment as compared to 20 percent in the previous year. PRC investment in Europe doubled in 2016 to $40 billion as compared to the previous year (Economist, October 4 2018). This figure dipped in 2017, but still remained robust at an estimated $33.7 billion (Merics and Rhodium Group, May 2018). Of the PRC’s top twenty foreign investment destinations in 2017, five were EU member states (PRC Ministry of Commerce, October 2018).
In order to defend its strategic interests, the European Union passed an investment screening mechanism in November 2018 targeted at the PRC. However, the voluntary nature of the mechanism, as well as concerns that the investment screening process may not be strict enough, has caused individual member states to rely on their own national laws and regulations. While there is a definite need to be more vigilant as individual member states decide how to defend their critical technologies and economic infrastructure from the transfer of intellectual property to the PRC, individual EU states should band together against the PRC’s vast economic weight and its tendency to press for bilateral, rather than multilateral, deals. Converging around France’s regime of investment regulation is a place to start.
Read the full article and more in The Jamestown Foundation's China Brief.
More from CNAS
-
Who Will Make Money on AI?
Reports
Executive Summary The private sector is playing a leading role in advancing the frontier of artificial intelligence (AI). As a result, commercial incentives are likely to have...
By Geoffrey Gertz & Emily Kilcrease
-
USTR Hearing on Section 301 Investigations into Structural Excess Capacity
Congressional Testimony
On May 5, 2026 Emily Kilcrease, Senior Fellow and Director of the Energy, Economics, and Security Program at CNAS testified at the Office of the United States Trade Representa...
By Emily Kilcrease
-
The UAE Wants a Dollar Lifeline
Podcast
Rachel Ziemba joins The Indicator to discuss the relationship between the U.S. and the UAE in terms of investment. Listen to the full interview on The Indicator | Planet Money...
By Rachel Ziemba
-
President Trump Wants to Be Able to Sell the Iran War as a Win
Video
Rachel Ziemba, founder of Ziemba Insights and adjunct senior fellow at the Center for a New American Security, says that investors should look beyond the ending of the Iran wa...
By Rachel Ziemba
