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China’s direct investment in the European Union: a new regulatory challenge?

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  • Haiyan Zhang
  • Daniel Bulcke

Abstract

While China is fast becoming an important outward direct investor, its companies are showing an increasing interest to locate in Europe and the European Union (EU). It has been suggested that this can partly be explained by the more lenient attitude of the European countries compared to the US, where some acquisitions were abandoned when they ran into political opposition based on security concerns. Yet, also in Europe, the media follow rather closely each new Chinese entry, and certain politicians have started to criticise the take-over of technology-oriented companies, especially by Chinese state-owned firms. Against the background of a very open foreign direct investment (FDI) policy as measured by OECD FDI Restrictiveness Index for the EU and the individual countries, an overview is given of the pre- and post-establishment obstacles to direct foreign investment. Also, the EU policy measures that directly or indirectly deal with incoming direct investment are discussed. Within the context of the EU competition policy and the merger regulation, the EU Commission has cleared five cases of take-over by Chinese state-owned enterprises. Although the Lisbon Treaty authorises the EU Commission to take charge of investment policy as part of the EU commercial policy, it will take time to realise this. If the announced negotiations about an investment treaty between China and the EU could work out the necessary balance, it would be an important step in achieving more reciprocity between their respective investment regimes. Copyright Springer-Verlag Berlin Heidelberg 2014

Suggested Citation

  • Haiyan Zhang & Daniel Bulcke, 2014. "China’s direct investment in the European Union: a new regulatory challenge?," Asia Europe Journal, Springer, vol. 12(1), pages 159-177, March.
    • Handle: RePEc:kap:asiaeu:v:12:y:2014:i:1:p:159-177
    DOI: 10.1007/s10308-014-0383-9
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    References listed on IDEAS

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    Cited by:

    1. Nana de Graaff & Diliara Valeeva, 2021. "Emerging Sino–European Corporate Elite Networks," Development and Change, International Institute of Social Studies, vol. 52(5), pages 1147-1173, September.
    2. Sophie Meunier & Brian Burgoon & Wade Jacoby, 2014. "The politics of hosting Chinese investment in Europe—an introduction," Asia Europe Journal, Springer, vol. 12(1), pages 109-126, March.
    3. Bas Hooijmaaijers, 2021. "A comparative analysis of the role of the state in Chinese, Japanese, and Korean investment in the EU," Asia Europe Journal, Springer, vol. 19(4), pages 427-444, December.
    4. Marta Anna GÖTZ, 2015. "Pursuing FDI policy in the EU – Member States and their policy space," Journal of Economics and Political Economy, KSP Journals, vol. 2(2), pages 290-308, June.
    5. Wei Yin, 2021. "A comparison of the US and EU regulatory responses to China’s state capitalism: implication, issue and direction," Asia Europe Journal, Springer, vol. 19(1), pages 1-25, March.
    6. Sophie Meunier, 2014. "A Faustian bargain or just a good bargain? Chinese foreign direct investment and politics in Europe," Asia Europe Journal, Springer, vol. 12(1), pages 143-158, March.
    7. Mahdi Ghodsi, 2019. "How Do Technical Barriers to Trade Affect Foreign Direct Investment?," wiiw Working Papers 160, The Vienna Institute for International Economic Studies, wiiw.
    8. Wade Jacoby, 2014. "Different cases, different faces: Chinese investment in Central and Eastern Europe," Asia Europe Journal, Springer, vol. 12(1), pages 199-214, March.
    9. Vaccarini, Katiuscia & Lattemann, Christoph & Spigarelli, Francesca & Tavoletti, Ernesto, 2017. "Chinese FDI and psychic distance perceptions on regulations in the German renewable energy sector," Energy Policy, Elsevier, vol. 101(C), pages 723-732.

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