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Chinese investment in Europe shrinks, mostly goes to EV industry

Chinese investment in Europe shrinks, mostly goes to EV industry
Geely Automobile Holdings Ltd.'s Zeekr electric vehicles bound for shipment to Europe at the Port of Taicang in Taicang, Jiangsu Province, China, on Thursday, 24 August 2023.

Investment by Chinese firms into Europe fell to the lowest in more than a decade last year, with most of the new money going into electric vehicles and related industries. 

Chinese companies invested 6.8 billion euros ($7.4-billion) into the 27 European Union countries and the UK in 2023, according to a new report from Rhodium Group and the Mercator Institute for China Studies in Germany. That was the lowest since 2010. Almost 70% of the new money went into EV-related areas such as batteries.  

The slowdown comes as Chinese business advances elsewhere in the world, with overall outbound investment the highest since 2016. That underscores the increasingly difficult relationship between Europe and China. It’s set to worsen as the EU prepares to impose tariffs on Chinese EV exports, a move that may prompt Beijing to retaliate.

Hungary received 3 billion euros of new Chinese investment last year, 44% of the total that went to Europe. The largest components are an 8 billion euro battery factory by Contemporary Amperex Technology Co., and Zhejiang Huayou Cobalt Co.’s cathode factory, which was announced in June last year.

A series of deals announced during Chinese President Xi Jinping’s visit to Hungary are likely to drive further investment. The Rhodium report also noted several new battery projects by Chinese investors across the continent, suggesting the focus on Hungary and EV-related industries is set to continue. 

Once up and running, these projects would allow Chinese firms to avoid tariffs by producing in Europe, and to reduce costs by being closer to suppliers and customers and cutting back on shipping expenses. 

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