Chinese Direct Investment in Europe – Challenges for EU FDI Policy

Chinese foreign direct investment (FDI) into the European Union (EU) has increased substantially over the last decade. Whereas the EU generally welcomes inward FDI, FDI from China has been often accompanied by concerns. In view of these developments, the EU now faces the challenge of reforming its FDI policy in such a way as to simultaneously (i) defend the EU’s current openness to FDI (including from China); (ii) address the security concerns that have been raised for some types of FDI; and (iii) ensure greater openness and a level playing field for European FDI in China. Two EU policy initiatives are particularly important here: the establishment of an EU-wide framework for screening inward FDI on grounds of national security and public order and the negotiation of a bilateral investment agreement with China. In the following we discuss the motivation, development and prospects of these initiatives.