The Evolution of Chinese FDI in Europe and Its Implications for Technological Interdependence: A Geoeconomic Perspective

The decline of Chinese foreign direct investments (FDI) in Europe, driven by expanded screening mechanisms amid geopolitical tensions and the Covid-19 pandemic, has led to a shift in investment strategies. While past investments focused on mergers and acquisitions (M&A) in high-tech sectors, current trends highlight a rise in greenfield investments (GI), particularly in the electric vehicle (EV) industry. This sector is strategically crucial for the energy transition and the European automotive industry but remains dominated by Chinese firms due to state-driven industrial policies. The geographic distribution of FDI has also changed: whereas M&As targeted leading European economies, GIs are now concentrated in countries that have integrated into automotive value chains and maintain strong political ties with the People’s Republic of China (PRC), such as Hungary. This shift reflects a recalibration of technological interdependence between Europe and the PRC. While FDI screening has curbed M&As, the increase in GIs paradoxically reinforces the EU’s reliance on Chinese firms to develop domestic EV capacities. Thus, the European automotive sector exemplifies the tension between economic security and development in FDI regulation.
Keywords: FDI; China; Europe; geoeconomics; technology