The United Kingdom received the biggest attention from Chinese investors over other countries in Europe in 2018, despite logging a 76 percent decline from 2017. Research released by Baker McKenzie revealed that China's interest in the European region is driven largely by commercial reasons and that this is expected out of a booming investment market that is bent on expanding its reach internationally.
Overall, Chinese foreign direct investment into both North America and Europe plunged from $111 billion in 2017 to just $30 billion in 2018. This drop is mostly attributed to the United States, which saw an 83 percent decline in Chinese FDI from $29 billion in 2017 to $45.63 billion in 2018, as a result of a tense bilateral relationship between China and the US, as well as tightening US foreign investment movements. The fallout from the US could be the reason why Canada saw an 80 percent increase in Chinese FDI for the same period, from $1.5 billion to $2.7 billion.
Similarly, several European countries saw Chinese investment rise, though it was in the UK where the largest amounts were observed. France went up 86 percent from 2017 to $1.83 billion in 2018, Germany rose 34 percent to $2.52 billion, Sweden surged 186 percent to $4.05 billion, and Spain spiked 162 percent to $1.17 billion. Chinese FDI also grew in Poland, up 162 percent, Hungary, up 185 percent, Croatia, up 355 percent, and Slovenia, up by over 1000 percent.
When considering the total picture in Europe, investments from China fell in 2018, but they performed better than the US. The total value of closed deals, for instance, dropped 70 percent from $80 billion in 2017 to $22.5 billion last year. Majority of the 2017 figures was driven by ChemChina's $43 billion purchase of Syngentia. When you take the ChemChina deal out of the picture, Chinese FDI into Europe dropped 40 percent.
Across the board, the top industries where the Chinese are placing their money include the business services, automotive, ICT, and financial sectors. Baker McKenzie predicts further capital inflows to enter the European market in 2019, particularly as the China-US trade war continues.
