Chinese foreign direct investment in the European Union: explaining changing patterns

In the post-financial crisis period, new patterns have emerged in the development of Chinese foreign direct investment (OFDI) in the EU. This article examines these changes by analysing mergers and acquisitions (M&A) data from the Thomas SDC database in the period 2002–2014. Our initial analysis has suggested four significant developments. First, Chinese M&A in the EU shows rapid growth after 2008. Second, the core member states of the EU are still the main destination, but semi-peripheral and peripheral member states are new targets for Chinese OFDI. Third, investment goes to more diversified sectors. Fourth, state-owned companies remain significant but private companies and sovereign wealth funds are becoming increasingly prominent investors. These changes are tentatively explained by two sets of factors. The forced privatization of (undervalued) assets in the EU due to the Eurozone debt crisis, as well as a relatively friendly investment environment, are pull factors, attracting Chinese investors to the EU; the main push factors are the Chinese efforts to reduce dependence on export and reliance on the US dollar, as manifested in the Chinese government's Going Global Policy.