Chinese investment in Europe surged to its highest level since 2018, driven by a 67% increase in foreign direct investment (FDI) in 2025, according to a report by Rhodium Group and MERICS. This growth was primarily fueled by a 89% rise in mergers and acquisitions (M&A) activity, reaching EUR 7.9 billion, and a 51% increase in greenfield investment, totaling EUR 8.9 billion. The automotive sector dominated Chinese FDI, attracting EUR 7.6 billion, with a focus on the EV supply chain. However, the report highlights a slowdown in greenfield investment momentum, with a decline in the value of newly announced transactions, suggesting a shift towards exports as Chinese firms prioritize domestic industrial capacity and core technologies. This shift is further supported by a 9% increase in Chinese goods exports to Europe in 2025, with strong growth in sectors previously targeted by FDI, such as batteries, automobiles, and wind equipment. The report also discusses the impact of geopolitical uncertainty, macroeconomic conditions, and regulatory pushback against EVs on Chinese investment in Europe. Europe's scrutiny of Chinese investments and the risk of state intervention in the Netherlands further add to the uncertainty. The outlook suggests that Chinese firms will continue to favor exports over foreign investment, with a focus on domestic industrial capacity and core technologies, while European markets remain open to Chinese exports in the medium term.
