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Chinese investment into EU has hit €79bn, report says


EU investment deal is now on ice due to concerns over human rights in China

EU investment deal is now on ice due to concerns over human rights in China

EU investment deal is now on ice due to concerns over human rights in China

Chinese investment in the EU has grown more than tenfold in the last decade, a study has found.

However, EU investment in China is still far greater, at more than double the amount.

The report from auditors PwC Luxembourg and the Luxembourg’s development agency, Luxembourg for Finance also found that Irish-based investment funds account for over 16pc of all EU investment in China, second to Luxembourg, which accounts for 80pc.

The news comes after a recently agreed EU-China investment deal was effectively put on ice due to concerns over China’s human rights record and a recent suite of sanctions against MEPs and EU institutions.

Last week the EU also proposed sweeping new powers to regulate foreign state-backed companies trying to make acquisitions or public procurement bids inside the bloc.

The move targets Chinese dominance of the energy, raw materials and pharmaceuticals sectors, as well as its growing hold on technology.

But the report suggests that recent regulatory reforms in China and increasing interest from European investors are arguments in favour of free-flowing capital.

“While the political overtones are sometimes challenging, there is a need to be pragmatic, and to find a productive way forward,” said Nicolas Mackel, CEO of Luxembourg for Finance.

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The PwC and Luxembourg for Finance report found the total volume of Chinese investment in the EU rose from €6.1bn in 2010 to €79bn in 2018, with the bulk going to manufacturing (33pc).

Financial services came next, accounting for 18pc of all foreign direct investment (FDI) into the EU from China in 2019, followed by mining (16pc), leasing and business services (12pc) and wholesale and retail (6pc).

Chinese ownership of EU companies more than tripled in 10 years, from 2.5pc of companies in 2007 to 9.5pc in 2017.

But the report says that a new EU FDI screening mechanism that came into force late last year is expected to place around 83pc of Chinese mergers and acquisitions in the EU under scrutiny.

Meanwhile, the volume of EU foreign direct investment into China is still far greater , reaching €189.4bn in 2018.

The bulk went into manufacturing  (58pc), fo llowed by financial and insurance (18pc), wholesale and retail (10pc) and ‘professional, scientific and technical activities’ (10pc).

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