On behalf of vbw, Prognos examined the EU's economic ties with China. Trade and investment relations have intensified over many years.
Chinese investors in EU countries are particularly interested in companies from industrial sectors in which Europe is a technological leader – this is one of the main results of our study about the economic ties between China and the EU for the Bavarian Industry Association (vbw). In particular, these industrial sectors include mechanical engineering, the automotive industry, as well as computer equipment, electronics, and optics. This shows: A large proportion of Chinese foreign direct investment in EU countries is going to industries which are – according to the “Made in China 2025” (MIC 2025) strategy – of strategic interest to China.
Opportunities and risks
China is an increasingly important investor on the world stage. EU countries – being highly developed economies with promising key technologies - are the focus of the “Going Global” strategy used by the Chinese government to encourage direct investment from Chinese companies. Both European companies and EU countriescan profit from stronger economic cooperation with China. Nevertheless, China's MIC 2025 strategy and the “New Silk Road” also pose a significant risk: The MIC 2025 strategy wants China to become a technological leader in “key industries”. The “New Silk Road” aims at expanding China’s geopolitical influence and securing the markets of tomorrow.
Overall conditions for investors
In addition, the authors also examined the overall conditions for investments in both countries. China is opening up to foreign direct investment but remains a highly regulated market dominated by state-owned businesses. There is no “level playing field” for Chinese and European investors – the official objective of both the EU and China. Despite various announcements, European and Chinese companies do not have comparable access to each other’s markets. As a result, European cooperation in dealing with China becomes even more important: “Only when speaking with one voice, Europe does have the weight and size needed to negotiate with China on an equal footing,” says study author Johann Weiß.
Authors: Johann Weiß, Manuel Klement, Philipp Kreuzer, Sina Scheffer, Jan Trenczek
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Johann Weiß
Senior Project Manager